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Estate Planning | Tax Strategies | Financial Planning


How Discipline and Accountability can Help you Reach your Financial Goals

| March 24, 2020
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The financial markets over the last month have been, well, volatile. It's fair to say this is an unprecedented time. The sudden impact of the Coronavirus (Covid-19) is affecting people, and the markets, in very unexpected ways. Times like these that pose tests for clients and their financial advisers. It's important not to have knee-jerk reactions, but to understand how the wealth strategies in place account for market corrections and downturns, and to develop solutions (if needed) that still serve the long-term goals.

The perspective of current affairs can create an emotional response, which often trickles into financial decisions. In the same way, people are rushing out to buy gobs of toilet paper; some will panic and want to deviate from their established financial plan. When markets fluctuate, having a strong foundational relationship with a financial planner can help turn panic into patience. The markets are resilient, and they do recover. Diversity in a portfolio, a relationship with an adviser you trust and having a sound strategy that takes into account market fluctuations is the best way to weather any storm.

Discipline and accountability go a long way in reaching your financial objectives. Understand and communicate your threshold for loss. Strategies remain dynamic and do require re-evaluations, which is why you want to be proactive and stay connected to your financial adviser. Your adviser can find the right asset mix for you and help navigate the choices that present opportunities based on your financial targets. A young person will typically allocate a more significant percentage of a portfolio to equities with higher growth potential. In contrast, someone older would have a higher allocation of bonds to preserve assets better while providing an income. At times assets may need to be exchanged or portfolios rebalanced to reflect the current market conditions or to be certain financial goals are being met.

When you're living through a tumultuous time, it's easy to take a near-term view. But it's vital to remember how your wealth strategy was created, and why. Knowing the returns you'd like to see, and balancing those against your appetite for risk is essential. It may be a good time to revisit your risk tolerance and find your risk number. Based on your age, income, retirement goals, and other circumstances, you and your adviser established a plan. Whether that plan is aggressive, moderate, or conservative in its approach, staying the course and reviewing with your adviser will keep things on track regardless of world events.

Remember that wealth management is a marathon, not a sprint. During the marathon, there will be times when you'll want to veer off, maybe take a break, or sit out entirely. The truth is, there is no such thing as a "perfect" strategy when it comes to building wealth - we live in an imperfect world. But in the same way that having regular checkups with a doctor will be the best way to hep ensure physical health, so will meeting with your adviser and checking on your financial health. Always be upfront with your goals, your risk tolerance, and your expectations. Like any relationship, the fruits of your labor are only realized with proper care and nurturing. Build a relationship with an advisor you trust, that listens to you and can craft the financial plan that meets your goals.

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