All successful plans begin in the heart.
It is where they should begin too. What hopes, fears and expectations outline your life goals? How do you feel about risk? How will you cope with the growth/security conflict? Do you understand how the present connects to both the past and the future? Can you make decisions? Are you disciplined and organized?
The second level is defining and clarifying.
Devising a strategy.
The clarification step answers questions. Not many and all from the same family. The “W” family.
What is your lifestyle now? In money. The money you do not lose to the government, save o reduce debt is consumed. Lifestyle. How will it change in future?
What do you want? Could be debt free, or financial independence or future income. Maybe money for family or children.
What do you have to get it with? Money at hand. An inheritance, future income and savings. Maybe sale of an asset. Maybe a business
When do you need it? This will modify both the amount you set aside and how you invest.
Who is involved? Spouse, children, business partners, employees, maybe parents. Will the involvement change over time?
Where will you be in future? How will that affect the price of your lifestyle?
An advisor can help here by identifying conflicts and voids.
There are two more “W” questions.
Why? and why not? These help you with the next step. How do you get what you want?
Financial tools are the way. Like with other tools, craftsmen can help. They have more tools available and know when they apply.
Tools address risk – insurance or moving money from today to the past to pay debt or to the future for future use. Tools are the distilled experience of what works. They address efficiency.
Why helps select tools better. Why not gives you confidence that you have not missed something important. All tools must specifically attach to a strategic purpose. Without a strategic vision you cannot assess the value of a tool.
Working together, strategy adds effectiveness and tactics add efficiency.
The third tier is logistics.
Assigning resources, acquiring tools and preparing a method of monitoring outcomes. Some logistical steps are quite difficult. Do-it-yourself is not advised. Tax plans, wills and powers of attorney, estate plans, trusts, and even cash flow budgets work better if they are efficiently executed.
All plans evolve
The three Rs govern evolution.
- Record results.
- Review results in the context of the strategy, resources and possible tactics.
- Revise objectives to meet new realities, amend tools, increase or decrease asset allocation.
Planning is simple.
Little more than common sense. Getting a plan to evolve to a desired outcome is organized common sense. Keeping a plan current and effective is a little harder, but not impossible.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. email@example.com 866-285-7772