A decade is a long time, but sometimes it doesn’t feel like it.  A lot can change in a decade, even though it seems to happen in fast-forward mode, like a time-lapse video.  Before you know it, the scene has changed.  This seems to be especially true for people with young children and busy careers.  Time passes almost imperceptibly and before they even realize it, they’re in a very different place in life. 

This often leaves people with a nagging sense that they need to update some things.  Maybe it’s their estate plan or their insurance coverages?  But in my experience, for every one thing you can think of that needs to get updated, there are likely five to seven things that you probably would update if you had time to think about it.

You wouldn’t go an entire decade without seeing a doctor and getting a health checkup.  Yet so many people let a decade slip by without having a financial health checkup with a professional who can update their financial plan to be in line with their wishes.  If you or someone you care about is in this situation, I’d like to provide a framework for bringing your wealth and your goals into lock-step. 

 

HOW LONG HAS IT BEEN?

I work closely with my clients to build a comprehensive financial plan that gives them real peace-of-mind.  This crucial process forms the basis of my relationship with them and allows me to effectively guide them according to their wishes.  However, my colleague Mia Erickson says that you don’t need a financial plan as much as you need financial planning.

I agree with what she means – you don’t need a financial plan that sits on a shelf and never gets fully implemented.  That’s a waste of time.  You need financial planning to actually execute on all of the decisions you made while building your financial plan.  But it’s these decisions that I want to focus on here.

When you build a financial plan, it’s always with a vision of the future you can conceive of at that moment in time.  But, as the old saying goes, time changes everything.  One of the core benefits of having a formal financial plan is that it allows you to forget about it.  You get to go off and live your life knowing that you’ve been responsible to consider and build a plan for everything that matters to you. 

But this does not mean that you should forget about it forever.  I’ve come to believe that at least every decade, it is advisable to:

  • Sit down with a wealth manager and conduct a formal review.
  • Talk about what has changed in your life over the last decade.
  • Talk about the future, as you envision it now as opposed to when you built your financial plan.
  • Discover any disconnects or problem areas that need to be addressed.
  • Update your financial plan so you can go back to living life without nagging concerns that you’ve missed something that might hurt your or a loved one down the road.

While there is no alarm clock to tell you when you should have this conversation, I’ve come to believe that a decade is the longest time period you should go without this formal review.  If it’s been ten years since you had a formal review of your financial plan, let me provide you five key areas to focus on to see if it makes sense to schedule the review soon. 

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"Financial planning is the cornerstone of wealth creation. This is why I am so committed to helping my clients build the right financial plan, tailored to their unique family."

FIVE KEY AREAS TO REVIEW

I’ve conducted these financial health checkups with numerous clients over the years.  I find that our conversations are most beneficial when we focus on five key areas:

  1. Careers
  2. Health
  3. Family
  4. Foreseeable life events
  5. Net-worth

Once we have this conversation, we can then take a much closer look at how their wealth is structured and what needs to be updated to be more in line with their vision for the future.  Let’s explore these five key areas and as we do, I’d like to ask you some questions to help you reflect on your situation. 

 

WHAT HAS CHANGED IN YOUR CAREER IN THE LAST DECADE?

I wonder how you see your career today, as opposed to ten years ago?  What are the major changes?  Do you still work as hard today as you did a decade ago?  Do you still want to work hard?  Do you enjoy your work and find satisfaction in it?  Are you thinking about making any major changes, like maybe starting a new business or striking out on your own?  Are you thinking about retirement?

Many of the clients that I’m privileged to serve are in the private equity or venture capital industries.  I also work with successful executives in both public and privately held companies.  Work is a very important part of their lives.  Outside of their family, work probably occupies more of their energy and focus than anything else.  This is one reason I start these conversations by focusing on careers.

If your vision for the future of your work-life is substantially different today than it was ten years ago, this should definitely be reflected in your updated financial plan.  There are all sorts of financial considerations here that can impact your financial standing long-term.  Some of my clients can’t wait to retire.  Others never plan to retire because they enjoy what they do and as long as their health holds out, they want to work.

No matter what, you are ten years closer to exiting your career today, however you plan to do this.  How should your financial plan be updated to reflect this change?    

 

WHAT HAS CHANGED IN YOUR HEALTH IN THE LAST DECADE?

I wonder how your health is today versus a decade ago?  Have you, or someone you care about, experienced a major health event?  If so, how has this changed your long-term view of things?  How has this changed your priorities?  Are there people you care about who depend on you whose health you should be concerned about?   What sort of impact could this have on your financial situation?

My colleague Lisa Olson wrote an article about the untimely passing of her father and the way this impacted her and her siblings.  This important article outlines several types of legal documents that you should put in place both for you and your spouse and anyone who will depend on you to make decisions on their behalf, should the need arise.

What has changed in your health and in the health of people you care about in the last ten years?  How should your financial plan be updated to reflect these changes?

 

WHAT HAS CHANGED IN YOUR FAMILY IN THE LAST DECADE?

I wonder how your family is different today than it was ten years ago?  For many of my clients, this is what changes the most in ten years.  Have you had children or grandchildren?  Have there been divorces or deaths?  Have certain family members had falling outs that have split the family?  Have you grown distant to certain family members and closer to others?  Do your legal documents reflect your intent for your family members? 

It is a very common occurrence for people to experience major changes in their family life but to forget to update their estate plan and their insurance beneficiaries.  Please don’t make this mistake.  My colleague Craig Janus relates a story of a man who would have accidentally disinherited children from a second marriage and his current spouse simply because had not updated insurance beneficiaries. 

So I ask you – what has changed in your family in the last ten years?  How should your financial plan be updated to reflect these changes?

 

WHAT HAS CHANGED IN YOUR FORESEEABLE LIFE EVENTS IN THE LAST DECADE?

I wonder how your foreseeable life events have changed in the last ten years?  I use the term “foreseeable” because there are many things that might happen to us that we cannot see coming.  It’s hard to plan for those.  But there are many situations that give us years of advanced notice.  I want my clients to be as prepared as possible for those foreseeable events because this gives them real peace-of-mind.  Here are just some foreseeable events that can have substantial financial implications:

  • Retirement
  • Passing away of a parent or other loved one.
  • Graduation of children from high school or college. 
  • Birth of children or grandchildren.
  • Selling a business.
  • Children or other people close to you getting married. 

What foreseeable life events are on the horizon for your today that were not so clear ten years ago?  How should your financial plan be updated to account for these changes?

 

WHAT HAS CHANGED IN YOUR NET WORTH IN THE LAST DECADE?

I wonder how your net worth has changed in the last ten years?  Hopefully you’ve seen substantial increases in net worth because you’ve followed a solid financial plan.  However, if things have gone better than expected, this introduces a new set of challenges.  What do you do with the extra wealth you’ve accumulated?  If you don’t have a plan for this, it would be very easy to make decisions you might regret. 

What do you do if your net worth has gone down over the last decade or not developed in line with your expectations?  This can be a very difficult reality to face.  But it happens all the time, especially to business owners who are inclined to make risky moves.  People who face this situation really need to tighten up their focus on a financial plan.  This gives you the best shot possible at coming out of a financial nose dive and getting back on solid footing. 

So I ask you, what has changed in your net worth over the last ten years?  How should your financial plan be updated to account for these changes?

 

NEXT STEPS

If you have not updated your financial plan in the last ten years, my advice is don’t wait any longer.  Schedule a time to talk to a Whitnell wealth manager so we can help you re-forecast your vision for the future, conduct deep-dive due diligence and identify problem areas to address.  Updating your financial plan is one of the best ways I know of to increase peace-of-mind. 

 

© 2019 Whitnell & Co.  The information contained in this article is provided for informational purposes only.