Improving the Planning Process

As mentioned in our July monthly letter, our financial planning software released a new version this week full of exciting updates.  New functionality will improve our planning process by better integrating certain variables and placing a better framework around how we segment goals.  We think it’s a big step forward in The Asset Advisory Group’s mission to enhance our clients’ well-being and help them make smart decisions about money.

From a technology standpoint, the software will now address things such as Social Security not just on it’s own, but really look at how different distribution scenarios impact the overall portfolio.  These are certainly things we’ve evaluated in the past, but having them fully integrated into our planning tool will really help frame the impact and outcomes of various decisions.

When evaluating goals, we will now segment around needs, wants and wishes.  This isn’t a major shift, but an important one.  In the past, the Monte Carlo analysis would put all goals in one pot and then determine a probability of achieving success.  While useful, providing more sound footing around needs like food, water and shelter typically take precedence over travelling first class around the globe.  Going forward, we will be able to segment these three goal categories, putting an emphasis on making sure needs are met, which then allows for more meaningful conversations around how to prioritize the risk needed to meet the wants and wishes. 

For many clients, this will mean revisiting some of the “discovery” phase of our relationship.  The purpose of this is not redundancy, but to ensure that our existing clients go through the same detailed process in defining their goals that a new client would experience.  At the same time, we’re making sure we’re using the most up to date information available from our clients and that we are asking questions specifically designed to maximize the potential of the updated process.

We continue to be committed to creating customized experiences for our clients based on their individual wishes for a financial planning relationship.  Making an investment in the right technologies continues to be an important way of executing on this commitment and in working together to make smart decisions around mitigating tax issues, taking care of heirs and building, protecting and distributing wealth.

Have a great week!

Chip Workman, CFP®

cworkman@taaginc.com
www.taaginc.com

Resetting Expectations

I am an avid Cincinnati Bearcats fan. It was heartbreaking on Saturday to lose our first string quarterback, Zach Collaros, to a broken ankle. Although the players did a great job in the second half of the game adjusting to a new quarterback, we still lost to West Virginia. Zach’s out for the season and now four other teams are only one game behind our first place standing in the Big East. The Bearcats are still eligible for a bowl bid, but getting to a game like the Orange Bowl may be more challenging. I may need to adjust my expectations for post-season play.

This happens all the time in financial planning. We set goals, encounter obstacles, and need to adjust our plan when we face new challenges. This might be the loss of a job, an unexpected illness, or a precipitous drop in the stock market. While all of these events are beyond our control, how we prepare for them in advance and readjust along the way can minimize their impact on our ability to reach our goals.

Over the past 21 years, I have worked with many clients who have had to alter the original picture they had of their retirement. There were those who planned to retire from Procter & Gamble in March, 2000 when the stock tumbled from $87.44 to $61.00 in one day. Or the client going through a divorce only to learn that her husband had spent all of their savings, and they were living on credit cards. In each situation, what at first seems insurmountable is actually a temporary setback. The sooner you face a difficult situation, the less devastating its impact will be.

As we have worked through challenges, and my clients have made adjustments to their original course, they have still been able to achieve a fulfilling retirement. As we’ve often said in this blog, it’s not what happens to you, but how you respond to it that will dictate the success or failure of your plan.

While the Bearcat’s initial response to losing their quarterback seemed to be fear and panic, once they were able to regroup at halftime and adjust their game play, they came a lot closer to winning their game. Maybe I’ll need that hotel reservation in Miami after all…

Christine L. Carleton, CFP®
clcarleton@taaginc.com
http://www.taaginc.com/