Have you ever watched the TV show Mad Men? Do you remember the episode where Don and his colleagues are discussing what they want in life? They all answer with something that has to do with their careers. Don gets to thinking, and later in the episode, he asks his daughter what she wants to do in life. She replies that she isn't quite sure. Don then tells her that if she's lucky enough to think about it, she'd better write it down so she doesn't forget when she's older.
That episode always makes me think of what we do on a daily basis here at Family Financial Partners. When a new client comes in for that initial meeting, our job is a little like detective work - we have to dig in and find clues to who that person is and how they do things. We talk a lot about helping clients organize their financial lives, and two ways we go about that are finding information, increasing efficiency, and writing down goals and dreams.
So, what does organizing and making finances more efficient mean? Well, in the first step, we go through a list of items and have everyone complete a financial questionnaire. Then we talk through each and every one of those items and answers. By getting to know their personality and helping that person organize their thoughts and goals, we can help the client see exactly what they're working towards and what steps to take to make those goals reality.
I'm not just talking about financial goals here, but life goals as well. Why is this important? Because sometimes we get so caught up in life and the present that we forget to think about why we are actually doing what we are doing. It's easier than you think to forget about your goals, and your future dreams, when we get bogged down in the daily grind.
Once a client has written down a few goals, both short- and long-term, that's when we can really get into the nuts and bolts and create a plan for that family. Efficiency is key, and that key lies in the numbers. This is when we take an in-depth look at what someone is doing or not doing financially, and we can almost always find ways to make their money work harder for them. This could range from the more obvious things like paying off debt, sticking to a budget, or saving for college, to more complex items like estate planning, or how they are managing their investment accounts.
For example, sometimes we see people who have a concentrated position in a stock with a company they work for. This position may grow to a considerable size, and have potential in the future to either soar or fall flat. When we sit down and take a deep-dive look into this person's long-term goals, we can usually find a way to diversify that investment and make it work more efficiently for them down the road. If they want to shoot for the moon, and they truly understand all the risks and implications behind that, then we can help them work towards that. However, most people, in our experience, would rather take a more moderate approach, where they can still live a comfortable retirement with an efficiently constructed portfolio, vs. taking a higher-risk investment strategy.
Another example we've seen a few times over the years is the family that has a special needs child who may need personal and government assistance, should something happen to the parents. These clients usually have a life insurance policy with the child as beneficiary. However, setting up a specifically defined Special Needs Trust, with that trust being the beneficiary of a life insurance policy, allows the child to still possibly receive government benefits, and also help establish a guardian and trustee as needed. This simple change doesn't require extra investments, reallocation, or even large amounts of money, but it could save a lot of money in the long run, increase financial efficiency and help avoid a costly mistake.
The planning process can be extensive and surprising, and without careful organization of thoughts and finances, it can be difficult to make the best decisions for yourself and your family going forward. Most of the time, people don't even know they're not being as efficient as possible. If you'd like for our team to go over your financial life and make recommendations about increased efficiency, give us a call anytime. We're always here to help.