Joshua Schmitt, MSF, CFP®
“Would you tell me, please, which way I ought to go from here?’
‘That depends a good deal on where you want to get to,’ said the Cat.
‘I don’t much care where -‘ said Alice.
‘Then it doesn’t matter which way you go,’ said the Cat.”
-Alice in Wonderland
Where do you want to get to?
In the classic book the 7 Habits of Highly Effective People, Habit 2 “Begin with the End in Mind” is based on the principle that all things are created twice. There’s a mental or first creation, and a physical or second creation to all things. The book goes on to say that all things are created twice, but not all first creations are by conscious design. If we do not develop our own self-awareness and become responsible for our first creations, we empower other people and circumstances (or even tweets!) to shape much of our lives by default. We can either live a life by design or by default. In the design mode, we are empowered, calm, and confident because we are in control. We have a clear vision that is guiding us forward. In the default mode, we become reactive and fearful, reactive to circumstances or other people’s agendas – we feel out of control.
And so it is with our financial life.
We work with you to design a Financial Plan that meets your needs. That is why we begin by asking questions like “What are your goals?”, “What are your income needs?”, and “What kind of legacy you would like to create?” Through this needs-based approach, we are empowering you to take responsibility for the first creation – the vision for where you are heading and what you would like to accomplish. We want to ensure your assets are serving their purpose. In addition to asking you these questions, we gather information about your current situation by reviewing your insurance coverage, current investments, estate planning, taxes, and more. This gives us a comprehensive view of your financial life and helps us get to know you, your goals, and needs better. Just like the cat in Alice in Wonderland, to tell you which way you ought to go from here, we need to know where you want to get to.
To be clear, developing a Financial Plan doesn’t apply only to planning for and achieving financial independence. Financial independence, or having sufficient wealth to live on without having to depend on income from employment, is just the first checkpoint along the way. Every goal or major purchase in your financial life, from your philanthropic desires to building a legacy or buying a vacation home should have an accompanying Financial Plan. Case and point. Jeff Bezos, the Amazon CEO and current wealthiest person in the world was interviewed recently at The Economic Club of Washington, D.C. During this interview, he spoke extensively about his personal Financial Plan and his vision for his philanthropic endeavors. He talked about how he developed his vision, and the funding and structure he is going to put in place to accomplish his goal. He began with the end in mind.
Our experience shows people act differently when they have a plan, it provides a sense of calm, confidence, and security. They know what purpose their assets are serving. Having a plan takes the abstract concept of financial independence or building a legacy and gives you a concrete reference point. A reference point that you can come back to time and time again to track your progress. A reference point that provides you with the confidence that you can weather life’s storms and stay on track to accomplish your goals. And finally, a reference point that you can adjust when your circumstances or goals inevitably change.
Only once we have discussed your goals and vision for your financial life, completed a comprehensive review of your current situation, built a Financial Plan, and ran projections to give you an idea of your progress toward your goals, can we begin making recommendations. As you follow the process, it should be clear, that every recommendation we make is comprehensive in light of your overall plan. It must fit into the bigger picture and help bring you one step closer to accomplishing your goals. The cornerstone of every recommendation we make is education. We want you to not only understand all of your options so that you can make an informed decision but we want you to understand the why behind the recommendations so that you fully embrace them. The goal here is to optimize your financial life through these recommendations in such a way that you are empowered.
But you’re a Creative Planning client and you’ve been through the process. So why am I writing this? To serve as a reminder of the work you’ve done and the progress you’ve made. Where you are is not a random outcome based on other people or circumstances out of your control. Where you are is a thoughtful, step-by-step, process-based, long-term result of designing a plan based on your vision. This is an antidote to the next time the stock market is turbulent and the headlines are full of chaos and confusion. Come back to this article and remind yourself, that you are smart, patient, calm, and in control. Remind yourself those headlines are trying to shape your thinking and force you into a reactive default state. You know where you are heading, why, and what it will take to get there. You have a plan designed to meet your needs. Take a step back and look at all of the progress you’ve made. Always come back to your long-term plan.
If you are unsure of your goals or do not have a clear vision for the future, there is no time like the present. We want to hear about it. It might make sense to revisit your Financial Plan. Remember, the journey of 1,000 miles begins with the first step. Would you rather feel empowered and live a life of design with a Financial Plan you can reference or do you want to continue to react in default mode being controlled by panic and fear? Helen Keller put it best, “The only thing worse than being blind is having sight but no vision.”
This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.