The Weekly Insight: The Importance of Planning Graphic

We sometimes joke around the office that “we wish we were meteorologists”.  Why?  Because it seems they can be wrong all the time and never get fired!  (Sorry to any meteorologists reading this!)

We spend a lot of time in these pages explaining to you why we believe something and the process we went through to come to that conclusion.  But as we have all learned in 2020, the best research and the hardest work do not guarantee you are going to be right.  Lord knows we have not been right on everything through the years.  You can see how our thought process has evolved by simply look at past issues of this column.

So, when you break down the decisions we make for your portfolios and for your financial future there are really two things that drive our decision making:  things we believe and things we know

For example, we believe the closer this election gets the more volatility we will have in the stock market.  That belief is backed by reams of data about past historical examples, but just because it has happened that way in the past does not ensure it will happen again.

Then there are things we know from years of experience.  Today we are going to talk about one of those items.  It’s not exciting.  But it’s important.  And it can have a profound effect on your long-term future:  the importance of your financial plan.

The Importance of Your Financial Plan

Every one of you has a financial plan.  It may not be written.  It may not have been worked through with a professional.  But we can guarantee each of you has gamed out the following: “Today I have X.  I want to have Y.  To get there I need to do Z.”

Some of our clients are intensely focused on these items and it is a priority of every conversation we have.  They are relying on us to help build and track the plan.  Some are doing it themselves.  Some do not have a formalized plan.  None of these are wrong answers.  For example, if you have $10 million, are 85 years old, and spend $100,000 per year – you are probably not particularly concerned about having a detailed plan in place.  Or if you are 40 years old and are focused on making money right now, not what retirement will look like, it is also likely you are less focused on the day-to-day of your plan.

But think about it the other way.  If you are that 85-year-old – are you certain your estate is organized the way you would like before you pass away?  Or if you are the 40-year-old, do you know how long you must work or how much you need to save to be able to retire?  That is where a financial plan comes in.

Updating Your Plan

This is the most important point in this memo.  If you read nothing else — please read this section!

As you know, 2020 has been a crazy year.  There is no adjective we can put with “2020” to fully describe just how insane it has been.  But if you are like us it has also been a year that has put a few things into perspective.

Our kids just went back to school last week.  In a sense it is a scary time, but each of us in the office would also tell you our kids needed to be back with their friends and teachers.

However, when they left for school, we also reflected on something else.  We have spent more quality time with our children in the last five months than probably at any time in their lives.  There were no baseball games or band practices to race off to.  No work dinners to attend.  Instead, when the workday was done, we spent time with our families – real time.  And it was meaningful.  To them, certainly, but especially to us as parents.

Each of you probably has your own clarifying moments that have come out of this wild ride.  Maybe it is a decision to start a new business.  Or retire.  Or spend more time traveling.  It may also be changes in how you feel about risk – especially in your investment portfolio.

We are constantly reviewing and updating portfolio strategies based on our current assessment of the market and the economy.  It is the current assessment of your life that may need to be updated in this conversation.  Have your liquidity needs changed?  Are you thinking about retirement earlier than previously planned?  Is a spouse starting to work from home?  The question you need to ask yourself is this:  Is your plan, and your portfolio, still in line with your situation? 

One of the problems in our line of work is there is no way for us to know the answer to that question unless you tell us.  And it is more likely today than at anytime in the last decade that your situation has changed.

So, we are asking you today to help us.  Think about this topic.  If your goals or situation has changed, now is the time to address it! 

Now Is the Time

We want to reiterate that point:  now is the time!  The market has clawed its way back from the brink just five months ago.  And as we stated in our memo last week, we are quite optimistic about the fundamentals of the market today (that is one of those things we can know!). 

But the next few months are not as simple as the fundamentals.  The more political things become, the more the market may behave based not on the things we know, but on emotion. 

This is an opportunity.  As we start the march forward – in this calm time before more unknowns approach – let’s take the time to make the changes you might desire in your plan.  This is especially important if you have known liquidity needs in the next six months.

Where to Start?

When it comes to the formal planning process, the biggest problem we see clients encounter is simply getting started.  Clients look at this process and imagine it to be daunting and filled with difficult questions.  It can be discouraging.

It is important to remember that this is where we come in!  Our job is to work with you to ask the questions you may not even know need to be asked, to organize the information and to do all the math.  It is true – there is some work on your part required.  You are going to have to provide us with the information we need to get the ball rolling.  But once that process is completed, it becomes more about communicating changes with us than it does hard work on your part.

We talked in these pages several months ago about the Insight Estate Book which is available to our clients.  While we’d be happy to provide you a book for your use, it’s also important to note that the information we suggest putting in the Estate Book is also the same information needed to get a good financial plan rolling.

For your convenience, we have linked to a copy of what is included in the Estate Book.  You can see it by clicking here.  We would be happy to work with you to generate this information both to create an Estate Book for your personal use – but also to develop it further into a personal financial plan.

We will get back next week to talking about the intricacies of the market, where we are headed, and how Insight is navigating through this wild year.  But we appreciate you taking some time this week to pay attention to a topic that is just as important – if not more so – as how we handle the day-to-day fluctuations of the market.  We stand ready to assist you in building a long-term and feasible plan for your financial future.  Now is the time to do it.  We look forward to helping!


Insight Wealth Group