Robert Kiyosaki, author and founder of Rich Global LLC and the Rich Dad Company, once said, “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” Many of us consult a doctor when we’re sick, seek out an accountant when we need our taxes done, and meet with an attorney to draft trust and estate documents. Yet, the question remains, why is it that some of us hesitate to meet with a financial professional to plan for our future?
I sat down with Jim Fernandez of UBS Financial Services in New York City to discuss three financial concerns that many of us have as we plan for our retirement and beyond. Fernandez is a CERTIFIED FINANCIAL PLANNER™(CFP®) certificant, a designation awarded by the Certified Financial Planner Board of Standards, Inc. along with the Chartered Retirement Planning Counselor (CRPC®) and Certified Divorce Financial Analyst® (CDFA®) designations. He also holds his Life/Accident & Health Insurance License. These designations allow Fernandez to continue to educate himself allowing him to provide thoughtful advice to his clients given the complexities they face.
As a CFP®, CRPC®, and CDFA® with over a decade of industry experience, Fernandez knows the importance of proper financial planning. Comprehensive financial plans can help you to clearly understand your needs, wants, and wishes. It’s a collaborated call to action to help maintain your current lifestyle, but more importantly, help you improve it.
Three common fears when it comes to our financial health:
The fear of not saving enough
Sitting down with a financial advisor to discuss a personalized financial plan allows you to build a roadmap to make sure you’re on track to achieve the life you envision towards retirement and beyond. Engaging in this deeper conversation can help uncover concerns you may have, how you manage risk and uncertainty, and how you define financial success. One question Fernandez asks his current and prospective clients is, “How do you decide between spending, saving and investing?” Having a clear understanding of your spending plan is an essential starting point to get you on the right track towards achieving your goals. Consistently utilizing your spending plan helps to mitigate unnecessary expenses that could otherwise interfere with your bigger financial goals. As Benjamin Franklin once said, “Beware of little expenses. A small leak will sink a great ship.”
The fear of outliving your money
As we would all like to sail smoothly into retirement, one fundamental question we may be asking ourselves is, “Will I be able to save enough to live comfortably?” One of the many benefits of a financial plan is that it uses real life examples and ‘what if’ scenarios. Fernandez says, “Our financial planning software allows us to run a number of ‘what if’ scenarios while stress testing different rates of returns, future withdrawal amounts, and inflation rates, amongst a number of other variables.” This process can help support and calculate the probability of success of not outliving your money. If the results are unfavorable then Fernandez and his team will work with their clients to make necessary adjustments, such as spending less, saving more and working longer. He also likes to view himself as an expectations manager and takes pride in helping his clients understand if their financial goals are realistic.
The fear of mismanaging your finances
Ok, I am saving money, now what? Here comes the importance of a Goals Based Wealth Management plan. Fernandez and his team help clients organize their financial lives into three key dimensions: Liquidity, Longevity, and Legacy. The Liquidity strategy focuses on your short-term cash need to help maintain your current lifestyle for the next one to three years. The Longevity Strategy is used to build and maintain a diversified portfolio to help you reach a fully funded retirement goal. These goals include paying for healthcare, long term care expenses, and generating a sustainable income stream in retirement. The Legacy Strategy is used to improve the lives of others through philanthropy and gifting to family members, for generations to come. “Embracing a goals-based approach can help our clients take their emotions out of investing, especially during times of increased financial market volatility,” Fernandez said.
As most of us know, there is no true way to predict and time the markets. A detailed plan of action in place can help alleviate irrational financial decisions driven by fear and emotion. Fernandez stated, “A comprehensive financial plan is a living and breathing document that should be constantly reviewed and revised as your life and goals change.” With the right financial advisor who provides professional advice and guidance, we can all acknowledge our fears and live a more meaningful and purposeful retirement.
*UBS Wealth Way is an approach incorporating Liquidity. Longevity. Legacy. strategies that UBS Financial Services Inc. and our Financial Advisors can use to assist clients in exploring and pursuing their wealth management needs and goals over different time frames. This approach is not a promise or guarantee that wealth, or any financial results, can or will be achieved. All investments involve the risk of loss, including the risk of loss of the entire investment. Timeframes may vary. Strategies are subject to individual client goals, objectives and suitability.