Home > Our Resources > The Whitnell Way > Plan, Process And Partner
Plan, Process And Partner
How To Balance The Many-Faceted Demands On Your Wealth
By Mia Erickson
Learn more about Mia by visiting her bio page.
Many people make new year’s resolutions, if for no other reason than to set a course for the near future. But I wonder how you’ve done against your resolutions in the past. Have you achieved every goal? How many of the resolutions you made in January of 2014 did you fulfill by December of 2014? If you are like most people, you hit the mark on some and missed on others.
But this raises an important question, especially as it relates to your wealth. How will missing the mark on certain financial goals impact other goals? You see, every financial decision impacts other areas. If you are uncertain about how to answer this question, I think you need the three Ps: plan, process and partner.
The big goals
Most of my clients have a few major goals they want to achieve in their lifetime as it relates to their wealth:
- They want to send their children and sometimes grandchildren to college so they get an education that sets them up for success in life.
- They want to retire comfortably and enjoy their golden years.
- They want to take care of aging parents or other loved ones who will require care.
- They want to live a good quality of life in the meantime.
- They want to accumulate wealth that will outlive them so they never have to worry about money again and can leave a nice inheritance to their children.
Do these sound like your goals? Are these on your 2015 new year’s resolution lists? While your goals may not sound exactly like this, I’ll bet they’re close.
The challenge with achieving these goals
When you peruse the goals above, ask yourself how did you do in 2014? I would imagine you did okay on some goals but probably now realize you could have done much better. This is certainly the kind of thing I hear from people who are not working closely with a wealth manager like me.
I think people struggle to make progress against their goals for these reasons:
- It’s very complicated. When you look at these goals, it becomes clear that a decision in one area impacts another. For instance, how will sending your child to a college that costs $75,000 per year, versus $25,000 per year, impact your retirement? Is it worth it for them and for you? How will this decision impact your ability to care for an aging parent – especially if both events occur at the same time, which is often the case?
- It takes time. The work that goes into building a plan to achieve these goals is very significant. Most people don’t have the time or would prefer to spend that time with friends and family. Those who start to build a plan often end up feeling overwhelmed and essentially just give up. They might have a broad list of goals, but it’s not really a plan.
- It takes consistency. It’s one thing to build a plan. It’s something else entirely to stick to that plan over time. I recently had a client call me with great excitement about a piece of real estate that he thought was a great deal. After we spoke, he decided not to buy the property because it didn’t fit the long-term plan. Most people don’t have the discipline to be consistent year-over-year.
So what’s the solution?
For most people to achieve their financial goals, they need three things: a plan, a process and a partner. The plan sets the right direction. The process helps you stay on course over time. The partner helps you make the big decisions in life that sooner or later we all face. Let’s look at each of these.
The importance of the plan
The financial plan is the foundation of everything else. It is the key to ensuring that what you want to have happen with your wealth actually will happen. When I work with clients to build a financial plan, we look closely at those big goals I’ve listed above. But we also spend time soul-searching about what really matters to them.
For most of my clients, money represents their ability to care for the ones they love. So a great financial plan goes well beyond the mechanics of asset allocation (which is very important by the way). A great financial plan is like breathing life into your dreams. I have watched people breathe a huge sigh of relief after they see the plan we’ve built to accomplish their goals. They feel so much better about the future.
If you or someone you care about does not have a well-documented plan, we need to talk.
The value of process
A plan is only worthwhile if it is executed. Let’s be honest here. Life gets in the way. People get busy. There are shiny objects that attract our attention. There are opportunities at every corner to go off-course, like that piece of real-estate I mentioned earlier. This is why I have said: You Don’t Need A Financial Plan – You Need Financial Planning.
The process of executing your financial plan requires you to do a check-in not only with your financial advisor, but more importantly, with your priority list. Some people need to do these check-ins every quarter. Other people only need this once a year or so. The process of routinely checking against your goals greatly enhances the likelihood of staying on course.
If you or someone you care about does not have a firmly set process of checking-in against goals, we should talk.
The missing ingredient – the partner
A plan and a process are important. But it’s usually the partner who is missing. Here is what I mean. In the scenario I described above, one of my clients was about to make a decision that would have taken his family off-course from their goals. But before he made that very important decision, he called me.
I listened carefully to the details of the deal. I agreed with him that the deal was attractive. But then I reviewed how this decision would likely impact his family’s financial situation in the coming years. He ultimately made the decision not to buy the property. That was his decision, not mine.
I believe affluent families need a partner to help them sort through the important decisions in life. The large goals I’ve listed above all have financial components, as well as emotional components. One of the biggest challenges regarding love and money is how to be dispassionate when a big decision needs to be made.
Most people struggle with this because love and money get entangled. If money equals your ability to care for the ones you love, then certain decisions might signal how you really feel about those close to you. That’s a tough thing to manage.
Many affluent families do not have a partner who deeply understands their financial goals, who knows their family members, and who knows how to hold family members accountable to stay on course over time. This is one of the major reasons that resolutions fail. The emotions of the moment often outshine the long-term consequences.
If you or someone you care about does not have a partner to help sort through the important decisions in life, let’s have a conversation.
Whom do you care about?
Many of my clients have come to realize that they are not the only ones who need a plan, process and partner. Their children do also. This is why they have begun to give the gift of financial planning to their children. This is one of the best gifts you could ever give a child because it sets them up for a lifetime of financial discipline and success. If your children or someone else you care about could benefit from this approach, let’s talk.
The information contained in this article is provided for informational purposes only. No illustration or content in it should be construed as a substitute for informed professional tax, legal, and/or financial advice.