My father often said “life is what’s happening to you while you’re making plans to do something else.” It is something I keep top of mind in the fast pace world we live in.
The quiet time of summer affords us all the perfect chance to think about what’s important in life. It’s a time to slow down and reflect – a time to reassess goals and reevaluate objectives. For me, it’s a mid-year check up to look back at the past several months and what lies ahead both personally and professionally. It’s a time to think about thinking (metacognition) and something I encourage all my clients (and friends) to do.
Look in the mirror
Reflection starts with a look back to some of the first questions I ask clients. How do they envision their future? What are their long-term goals and have they changed? Answers to these seemingly simple questions can actually provide invaluable financial planning insight. This includes reviewing if investment portfolios are aligned with clients’ goals and measuring their progressive savings as it relates to long-term objectives.
There are many changes that one can anticipate – marriage, children, career advancement and retirement are just a few. Taking some of the longer summer days to consider the possibilities and related challenges is a good way to stay on track. Such changes can impact the kind of income needed to maintain a comfortable lifestyle and leave a legacy for the next generation, which may be different as families grow, children have their own children and we get older.
Investment recommendations should be driven by these present and future goals - liquidity for ongoing expenses and anticipated purchases; growth to help pay for education or retirement; and, wealth preservation to step back from day-to-day work and pursue other interests.
Planning and being prepared for the unexpected is more difficult but it’s one of clients’ biggest fears. I’m often asked, “If something happens to me, will my family be ok?” Answers emanate from a review of one’s present portfolio and its preparedness to defend against any major economic downturns, unexpected illness or loss of income. It’s a good time to make sure estate plans are updated and any required beneficiary changes are in place.
Take a closer view
While many take the summer to relax, spend more time with family or take a long overdue vacation, I do like to give clients a small amount of homework. The slower pace lends itself well to planning so my assignment is one’s personal financial to do list. The seven-point checklist is a way to evaluate life and its changes from a financial perspective – the past, the present, the future. Specifically, it includes the evaluation of the following:
- Expenses – What current expenditures exist and are others on the horizon?
- Investments – Is the current portfolio the right mix of risk and reward?
- Assets – Is asset allocation properly aligned with goals and objectives?
- Portfolio – Is the portfolio balanced in a way to protect against economic downturns?
- Contributions – Are savings potential maximized within 401K and other retirement plans?
- Beneficiaries – Are retirement and life insurance policy beneficiaries up-to-date?
- Mortgage and other loans – Is there an opportunity to reduce expenses through refinancing?
I encourage clients take time in considering their answers and working with a financial partner that has proven a level of caring – one that helps families better manage life’s changes, transitions and challenges.
Article provided by Albert A. Fox, CFP®, CIMA® (Pictured)
Headquartered in Mount Laurel, N.J., Fox, Penberthy & Dehn is an experienced team specializing in wealth management with a clear understanding of one’s life, needs and objectives. Using quantitative and qualitative analysis combined with the global resources of Morgan Stanley, they provide uniquely customized solutions to help create, grow and preserve wealth. These innovative, forward-thinking strategies are focused on defining clients’ current financial situation and are implemented to meet one’s goals for the future.