Talk To Your Financial Coach About The Purpose Behind Your Game Plan

Sometimes I wonder what it’s like to be a professional football player these days, when everyone is an expert on every sport, and there are an endless number of platforms from which they all can express their opinions.

We used to call it Monday-morning quarterbacking. Now it’s 24-7 on TV and radio, in print, and on social media.

It must be awfully tough to block out the noise and stick to the game plan. You know, the one the player and his coach spent months going over and they tweak whenever it’s needed.

I imagine that’s a little bit what it’s like for people who seek financial guidance. They have a retirement plan, and they think it’s solid, but there are all these voices out there telling them there’s a better way. And they start to worry. Or panic.

That’s why it’s becoming increasingly important for advisers, their financial coaches, to help investors recognize what they’re doing and why they’re doing it. If they can understand that, they’ll have a lot better shot at tuning out the noise.

It starts with an analysis. Much as a coach would spend time watching a new player and assessing what strengths he has and doesn’t have, an adviser should have a chance to review everything in your portfolio. When I’m working with a new client, I call this the “snapshot,” because it gives me a good picture of what we’re working with. I won’t say right away whether something is good or bad, but I will ask why you have it.

About half the time, I hear: “I don’t know.” The other half, it’s: “My adviser told me to do it.”

And so, for example, a person ends up with a strategy or product – let’s say a variable annuity – and he has no concept of how it works or what it’s for. All he knows is he just read an article that said annuities are bad, and a friend told him it’s the worst thing he could have done. So he wants out, surrender charges be damned.

But it isn’t just annuities. It’s your investments. Or why you do or don’t have a certain kind of life insuranceFinancial Coach. Everything you’re using should have a purpose in your retirement plan. And you should know what it is.

Then comes the “walk-through.” This is when I’ll take you through the recommendations I’m making and how they’re different – or the same – as what you’re currently doing.

Sometimes, a client has something in place that makes sense for what he’s trying to accomplish, and he doesn’t even know it. For example, there’s a life insurance policy he got 20 years ago that would be too expensive now that he’s older. It has great cash value, great loan options and he’ll never have to worry about insurability. It makes sense, and I’m not going to tell him differently just to make a sale.

But we’ll also talk about moves you should make – old things that aren’t working anymore and new things you should try.

We’ll definitely have a conversation about diversification, and what that really means. Some folks think it’s just owning stocks in a dozen or so different industries, or the good old 60-40 split between stocks and bonds. I like to show people what would happen to their portfolio if we had another 2008. (Most would bomb.) And we’ll talk about risk tolerance and what can happen to hard-earned savings if a retiree doesn’t make some adjustments when crossing over from the accumulation phase to the distribution phase.

Income is another part of the walk-through, and it’s where purpose comes into play again. Understanding your income sources – pensions, Social Security benefits, investments, rentals, bond income, whatever you might have – and how that total compares to your income needs is critical when we start to reposition your assets. How will each strategy give you the standard of living you hope to have in retirement? If there’s a big gap between your income streams and your income needs, it could mean making some tough choices.

And, finally, inevitably, the conversation comes around to how you’ll deal with the noise.

Now granted, you’ll likely never have thousands of people shouting at you in a stadium and telling you you’re doing it all wrong. But you might have Bill at the office coffeemaker. Or Janice at the HOA meeting. Or Glenn at the golf course. Not to mention all the chatter on your TV, radio, tablet, laptop and/or phone.

The hope is that once you understand the purpose behind your plan – how each play is designed to protect you from taxes, inflation and, we hope, any hiccups, corrections, downturns or disasters in the market – you can shut out all the negative chatter.

And maybe someday, when you’ve reached your retirement goals, you can do a little end zone dance.



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