A patient enters the office and a rushed doctor asks “where does it hurt and for how long?” Then he prescribes a pill and calls ‘next!’ Do you want to go back to that doctor? Too often advisors and investors want to skip through all of the examination, testing and diagnosis, and jump right into writing a prescription – or as we call it, a ‘Retirement Plan’.
This happens every day in the financial services industry. Advisors have a quick meeting or two, and then it’s off to the races with investment advice that will solve your every problem for the rest of your life. Ahhhh. If only life were indeed that easy. A good plan and a sound strategy take time, and at the end of its preparation, you should understand it well enough that you could explain it to someone else. It is exceedingly rare for us to ask a client “what is your strategy” and get a good answer, as the usual answer is “I don’t really know”, or “I’m about 70/30 between stocks and bonds”. That’s not a strategy, it’s an asset mix.
Remember how you worked hard to get to this point? Shouldn’t your advisor work hard for you too? We believe you owe it to yourself to get a very carefully, expertly and articulated plan that accomplishes more than just recommending a collection of “hot mutual funds du jour” and/or ETFs. Products and investments are like the set of fine clubs to the golf pro but no more than a chew-toy in the wrong hands. They do not constitute a plan as they are only tools used in the execution of a well-designed plan. You can buy the best hammer, nails, wood and appliances, but it will take a lot more to build a great house.
Your Retirement Planning Options
The array of investment options and asset classes today is vast. There is no such thing as a perfect investment, or a perfect plan. Tax laws are particularly an ever moving target. All asset classes have risks, benefits and limitations. They also have different tax implications, liquidity, performance profiles, and ‘best uses’. Balancing these benefits and limitations can be a challenge, especially if you don’t understand when, how, and why each investment is used.
Imagine building a house from scratch, with no real plan (blueprints), just a picture you snapped of someone else’s house that you really liked. You wouldn’t really know what materials were used, how it was wired or plumbed, the quality of the components, where to put your load bearing walls, etc. etc. To achieve that masterpiece you saw and wanted to recreate takes the skills of a well trained and experienced architect to sketch out virtually every aspect of that house before construction ever begins. If not, you are taking on a lot more risk than you realize, and what are the odds your final product will look as you envisioned? We’re betting pretty small! Good financial planning and wealth management is an established process.
And while we adhere to that process, the quality of the outcome can vary widely based on the planner’s background, education and disciplined approach.
Race car drivers at the Indy 500 all follow all follow the same extract track, have similar cars, observe the same rules and yet for some reason, some win and some do not. Consider why.
For Matrix Private Wealth Solutions, Comprehensive Planning Takes a Holistic Approach.
While technically speaking it is a comprehensive evaluation of an investor’s current and future financial state, created by using currently known variables to predict future cash flows, asset values and withdrawal plans, we believe it goes much deeper. Planning must incorporate:
- Wealth management,
- Potential college costs,
- Tax laws and the risks of higher taxes (ask yourself which direction you think taxes are headed?),
- Tax efficient retirement income,
- Legacy planning (wealth transfer) and planning for the liquidity to pass on your estate,
- Premature death or disability,
- Liquidity needs,
- That second or third home you want to buy,
- Market volatility risk throughout your life, and how that will impact the income you can take out to live on starting at retirement, without knowing how the market will perform,
- Business succession and continuity planning, if applicable, and
- Access to products to meet your needs, once identified, and not restricted by what the advisor has or wants to see.
How Matrix Private Wealth Solutions Helps You Achieve Your Retirement Goals
To do this, your advisor must truly understand you, your family, your goals, your values, your priorities, your hopes and dreams, and the universe of potential investments and strategies that can be brought to bear to help you achieve what you want, and not what the advisor thinks what you should want or have. This exercise is about you and your family, nothing else.
Once created, the plan must be continually monitored and updated because, as strange as it seems, the market and tax laws are fluid.