Planning for Life’s Fireworks

By Brittany Goodwillie, CFP®

With Fourth of July on its way, there will be fireworks lighting up the sky all over.  Financial planning can be a bit like fireworks: organizing chaos.

When we write financial plans for our clients, we never assume a perfect, rosy picture.  The truth is, life is messy. No matter how much you plan, a plan will never be perfectly implemented.  The purpose of planning isn’t to project what will happen. Instead, the purpose of a plan is to think through all of the things that could happen and to be prepared for life’s fireworks.

You may get a new job and move to a new area.  You may get married or have a baby. A divorce or disability could happen unexpectedly.  You may have a large expense you didn’t plan for or receive an unexpected inheritance. You or a loved one may need long-term care.  We don’t have any way of knowing which firework may spark next in our lives, but we know there will be fireworks and we must plan for them.  

At Autumn Financial Advisors, LLC, our first step with clients is to create a detailed financial plan.  We don’t write this plan thinking that it will be followed in its entirety. We know that many things will change between now and the end of your life.  Even with estimations and assumptions, a plan is a good starting point for actions you should take to get on track early on.  As life changes, we will update your plan and re-adjust our recommendations accordingly.  

Some financial planners use a client’s life expectancy to plan for how long their assets need to last to support their expenses.  Because compounding of expense inflation over longer periods of time is powerful, and because you can’t know what your life expectancy is or have control over it, we plan to increase the chance that you will stay secure financially even if you live past your life expectancy.  At this time, we assume that our clients live to age 100 and plan appropriately.

When creating financial plans, we think through stress test situations, and make sure to plan for the worst case scenarios.  We want to plan ahead for if you lose your job, become disabled, if your spouse passes away prematurely, or if you need long-term care.  That’s why we discuss your emergency reserve balance, insurance policies, and estate planning with you. We don’t sell any financial products because we want you to know that if we recommend something, it’s because we believe you need it, and we won’t benefit from it through commissions or in any way.  

Investing in the financial markets can also feel like organizing chaos.  Our Portfolio Manager, Erik Ringo, has earned his Chartered Financial Analyst designation (CFA) in addition to the Financial Risk Manager (FRM) and Chartered Alternative Investment Analyst (CAIA) designations.  He worked at T. Rowe Price and was the leading Quantitative Analyst for one of T. Rowe Price’s flagship multi-asset funds and, among many other things, helped to manage risk. Erik takes the time to position our clients’ portfolios appropriately based on his perception of exposures to a number of market risks.  At our firm, we always start with a detailed financial plan so we can understand your investment needs. After presenting your financial plan, our next step is an investment meeting, where Erik will educate you more on our investment philosophy and how he will manage your portfolio.

In reality, life is full of fireworks.  The chaos of life will come, and a financial advisor can help you to plan appropriately and re-adjust accordingly.  We want to help you to enjoy your life without having to worry about the financial implications of life’s many fireworks.  Enjoy your Fourth of July celebration and contact us to talk more about the importance of working with a financial planner.