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Financial Planning and Flight Planning

Steve Lofgren

Director of Financial Education

Last Updated
January 28, 2022
Preflight

A lesson in getting your planning right

What’s in a plan?

Think back to when we were just starting out as pilots…for me, it was over 30 years ago. Remember when we were chasing our early ratings and we would plan out those cross-countries? You’d get a blank copy of a flight plan and meticulously plot all your checkpoints, spin that wiz-wheel and calculate times and speeds and call the Flight Service Station to file the masterpiece. We all took planning seriously back then because, frankly, we were scared to death of ending up lost.

Fast forward to today and it’s all done for us by professionally licensed dispatchers and, in most cases, it comes straight to our Electronic Flight Bag. That one-page, photocopied flight plan we hand wrote out has been replaced by dozens of pages of information. My last flight plan for a flight from San Francisco to Austin in the Airbus A320 was 68 pages long. I know for you heavy metal, long-haul pilots, your flight plans can easily go over 100 pages.

Unfortunately, for way too many of us, our wealth management plans resemble our earliest flight plans. They are basic, often outdated, and there’s no one looking over them (like our dispatchers do for us at the airlines). Sometimes, we handicap ourselves in establishing a long-term financial plan because we know deep down that we’ve screwed it up, and are afraid to ask for help to get back on the right path. I equate that to doing your paper flight plan and still getting lost along the way — something was in error, and you didn’t catch it before it was too late.

Does this anecdote hit close to home? If so, there’s plenty you can do right now to take your flawed wealth plan and elevate it. Just like my 68-page flight plan, your wealth plan should be as professional and comprehensive. So how do you know if your wealth plan may need improvement?

  1. You know the airline is putting money into a retirement account, but you don’t know what those dollars are earning you.
  2. Your retirement projection from your company and union ends at age 65. What are you going to do after you retire with all that money? (Hint: It usually gets really complicated.)
  3. Do you have adequate life insurance and an estate plan for where all your money will go in the event of your death? If you answered “no” or “not sure” to either of these, you should make them a high priority.
  4. Are you in the “set it and forget it” financial crowd, sometimes known as Bogleheads (named after index fund pioneer Jack Bogle)? If yes, you may be selling your portfolio short. What worked in the 90s and 00s is probably outdated and inefficient today.1

It’s never too late to fix what’s broken

Let’s be honest: It’s hard to admit when we make mistakes. The airline industry has evolved from that fact, and now we have CRM and TEM programs that have made it ok, and preferred, to admit when we have made a mistake. The safety benefits of this introspective look at our flying skills are without question. I’m going to encourage all of us to take the same approach to our financial plan. Just like with a flight plan, I believe having a long-term, well-mapped-out wealth management plan with a well-qualified, experienced wealth manager watching over you (like a dispatcher) is key to having a solid financial future for both yourself and your family.

The do-it-yourself pen and paper flight plan died years ago. The same is true with a financial plan. Times have changed, the complexities of wealth management have increased, and doing things entirely on your own is a failure of CRM/TEM. It’s never too late to fix what’s broken, and working to create a comprehensive wealth management plan will be the final smooth landing of your career.

Footnotes

  1. Vanguard Advisor’s Alpha, February 2019.
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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. 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.

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