Recomendados
Más contenido relacionado
Similar a Financial Planning vs. Reacting
Similar a Financial Planning vs. Reacting (20)
Último
Último (20)
Financial Planning vs. Reacting
- 1. Securities offered through Commonwealth Financial Network®, Member FINRA/SIPC. Planning Vs. Reacting A Proactive Approach to Challenging Economic Conditions Presented by: Kris Maksimovich, AIF®, CRPC® 18170 Dallas Parkway, Suite 103 Dallas, TX 75287 (972) 931-3818 info@gwadvisors.net | www.gwadvisors.net
- 3. The Emotional Reality • You are not alone. – Fear and anxiety are commonplace when the market experiences periods of fluctuation. – The reality is that your investments increase and decline along with overall market performance everyday but sharp declines can impact us emotionally. • An emotional response is a natural response. – We’re humans, not machines! Emotions will always play a role in how we deal with challenging situations. – But how can we acknowledge our emotions and still manage our finances? • Take some time to verbalize how you feel. – Sometimes simply stating how you feel or writing it down can help release the tension. – Once you’ve respected the emotion, you may be able to focus on action.
- 4. What’s the Secret to Worrying Less? • No magic bullet • Empowerment through action • The benefits of financial planning – Results of a study conducted in 2008* by the Financial Planning Association and a leading financial institution
- 5. Study Statistics Worth Noting • 50% of the planning participants feel that they are in control of their financial future. • 9 out of 10 planning participants (88%) feel that they have clear financial direction, which is about 50% higher than those who don’t have professional support.
- 6. • Planning participants are 50% more likely to say their goals and dreams are financially secure. • 42% of planning participants feel extremely or very prepared for retirement (vs. 16% of those without an advisor). Study Statistics Worth Noting continued
- 7. What’s Most Important to You? • One benefit of planning is that it gets you thinking about what is really most important to you. • Your concerns over your finances are likely more specific than “I want more money.” – What is the “why?” behind your goals? • What is meaningful to you may not always be quantified in dollars and cents.
- 8. Important, Intangible Goals • We already mentioned that some of the items that are important to you are going to be less tangible, like: – Family – Community service – Leaving a legacy • These intangible items can be reframed in terms of quantifiable financial planning goals, like: – Protecting your family by having adequate insurance – Leaving behind a legacy with a properly structured estate plan – Giving back to your community with a charitable trust
- 9. A Methodical Approach to What-If Worries • It’s normal to question how things would look for you if different variables changed. – How will adjusting certain goals for time and cost impact your ability to attain them? – What if you were to save more and spend less? – What if you had to save less? – What if your investments declined more or less over time? • An investment analysis tool can provide perspective – An investment analysis tool can help you to understand potential outcomes by taking past market conditions into account.
- 10. A Written Financial Plan • Road map to your goals • Includes probability of reaching goals based on testing • Living, breathing document – A good plan is updated regularly—typically annually—to ensure that it still matches your current situation and accounts for any changes. – A financial professional monitors the plan and keeps you on track with your goals. – Just like no two clients are alike, no two plans are alike!
- 12. Financial Planning Myths Myth #1 Financial planning is for the wealthy. Truth: Financial planning is for anyone who wants to take control of their financial goals.
- 13. Financial Planning Myths continued Myth #2 I don’t need life insurance until I’m old (or I already have enough insurance). Truth: The amount of insurance you need is based on several factors, not simply age. Many people think they have adequate coverage but may not.
- 14. Financial Planning Myths continued Myth #3 I can’t afford professional advice. Truth: The cost to your goals and your emotions may outweigh the cost of professional advice.
- 15. Helpful Websites • www.mint.com – budgeting info • www.dinkytown.net – financial calculators • www.bankrate.com – bank lending rates • www.annualcreditreport.com – credit reporting info • www.AARP.com – consumer information
- 16. You Don’t Have to Go It Alone • Taking control does not mean you have to uncover all of the solutions on your own. • A financial professional can assist you with: – Goal definition – A written financial plan – Financial planning for • Estate plan coordination • Retirement income planning • Charitable giving • Risk management • And . . . everything else! • Proactive planning = Less anxiety
- 17. Contact Us Kris Maksimovich, AIF®, CRPC® 18170 Dallas Parkway, Suite 103 Dallas, TX 75287 (972) 931-3818 info@gwadvisors.net | www.gwadvisors.net
Notas del editor
- How do you think this person is feeling right now? <Let audience make suggestions, which will likely be along the lines of lost, scared, confused, nervous . . .> Why do you think this person feels this way? <Let audience think about it; they will likely not able to come up with a response/guess.> We don’t really know why this person looks/feels this way, but we can probably guess that, whatever it is, they will be able to deal with the issue and make it through. They won’t always feel the way they are portrayed in the image. How do we know this? What are some examples of times in your life when you’ve had to deal with an obstacle and tackle unpleasant feelings? <Allow audience to talk about times they’ve had to do this. Consider sharing your own story.> The reason we are able to speculate that this person is going to be okay is because we, too, have had challenging experiences in our lives, and we have managed to work through them to get to a better state of mind. The same process of overcoming, and dealing with, difficult events holds true when considering the recent market turbulence and its impact on your finances. We are going to talk today about how you’re feeling and also about what you can do to effectively minimize your financial worries. You can proactively take control of your financial life!
- Confused, stressed, afraid? These are just a few of the emotions people naturally experience when there is volatility in the investment markets. Whether you are starting to build a nest egg, or are close to retirement, the reality is that the market’s negative performance will likely impact your investments. That’s not a good feeling, and it is not one that we should try to pretend we don’t have. We are human, not machines, and humans feel and react emotionally to circumstances beyond (and even within) our control. The tricky thing with emotional responses, though, is that they often result in ill-advised action. It’s nearly impossible to make a sound decision when you are responding out of fear or anxiety. Sometimes it helps to simply verbalize or write down the feelings we’re having or to share them with someone—a financial professional, friend, or family member, for example—in order to release some of the tension. Once you’ve acknowledged the emotion and others have supported your feelings, you may find it easier to focus on making a decision that’s not tied to your emotional response.
- There is certainly no quick, magic solution to worrying less. You likely know people who are much more anxious than you, and others who seem completely calm, and it’s hard to pinpoint why each individual may feel so differently. Sometimes it’s a matter of personality, but it may also be a matter of acting instead of reacting. We typically feel more powerful when we are doing something than we do when something is being done to us. The same logic carries through to your finances and how you feel about them. One way you can take action is through the use of financial planning services. Not only is financial planning a proactive approach, but a recent Financial Planning Association study unveiled some major benefits of utilizing financial planning that branch beyond just dollars and cents and into emotional well-being. *FPA® and Ameriprise® Value of Financial Planning study conducted by Harris Interactive, August 2008. The Financial Planning Association (FPA) and Ameriprise Value of Financial Planning Study: Consumer Attitudes and Behaviors in a Changing Economy was conducted online within the United States by Harris Interactive on behalf of the Financial Planning Association and Ameriprise Financial between June 27 and July 18, 2008, among 3,022 adults with greater than $50,000 in annual income or investable assets. No estimates of theoretical sampling error can be calculated; a full methodology is available.
- Study results are revealing when it comes to how much more secure those participating in financial planning feel compared with those who don’t have professional support. While it is not a 100% cure-all, taking a financial planning approach to your finances could very well offer some much needed stress-relief.
- The underlying question clients face during the financial planning process is, “What’s most important to you? And how can we make sure those needs are addressed?” No one wants to lose money, and, most people, if asked, would say they simply want more of it. That’s certainly reasonable, but when we think about money, we don’t often consciously think of the “why?” behind our desires—meaning, we may be focusing too much on needing more money, when we should be considering the goals we want that money to help us pursue. You may want to make a list of the specific goals you are seeking to meet. For example, you may want to fund a child’s education, you may want to retire early and to have a specific lifestyle during that retirement, you may want to take a small vacation next summer or save for a dream vacation down the road. When you’re considering what’s important to you, there may be other answers than tangible things. Your answers may be more along the lines of “my family is important to me” or “leaving a legacy is important to me” or “giving back to the community has always meant a lot to me.” Whatever comes up for you should be considered. How you go about these less tangible goals is part of the bigger planning picture. The beauty of financial planning is that you will be asked to consider your feelings about money and what you want to do with it—so you can develop the most meaningful set of goals possible. You will start thinking in terms of goals instead of performance, and with that change comes a freedom from some of the daily market worry.
- Remember those intangible things that are important to you? Well, it’s possible to quantify them and add them to your list of goals. For example, the importance of family may come through in having a professional work on a proper estate plan to make sure your heirs are taken care of when you’re gone. Or perhaps you haven’t bought the appropriate insurance or you don’t have enough of it to protect all the plans you have in place should the unthinkable happen. Maybe a personal passion turns into the form of a charitable trust or other vehicle by which you can give back to your community or another recipient.
- It’s natural to worry about the what-ifs. These are the things that may keep you up at night as you consider your goals and the many different factors that could help or hinder them. Another beautiful thing about financial planning is that it provides a methodical approach to all of these what-if scenarios, so you don’t have to worry. Investment analysis tools contain complex math and logic, but they boil down to a way to take into account different market cycles and other variables and offer an understanding of what could. Instead of running through the scenarios in your mind, you can let a financial professional take that stress from you with a formal process.
- One of the outcomes of a written financial plan is the testing we just discussed. The probability of reaching your goals based on different variables is an invaluable piece of information as you look to proactively plan for the future. You may find that you are right on track. What a relief that is! Or you may find you have areas to improve upon. The point is that you are doing something positive to make those changes. Knowledge is power, and your written financial plan puts that power in your hands. A plan should not be considered a one-time, set-in-stone document. It changes as your situation changes. You may meet goals, add goals, alter goals, or have a change in income, savings, or net worth. The possibilities for change are limitless and so must be the opportunities to update and reevaluate your plan. Without a plan, your efforts simply lack purpose. You need the “why?” for your endeavors to have meaning. The plan lays this out for you plainly, and a professional can guide you from there.
- Because there are so many issues involved in your financial life, the application of the full financial planning process makes sense to address your concerns. Knowing that you have a time-tested process in place will relieve some of the anxiety that comes with tackling your most important goals and concerns. As you move through the process, you’ll go from the very broad (such as that goal finding and quantifying piece we discussed) to the very granular (such as picking out the specific insurance carrier and product type you’ll need to meet your family’s needs). Last in line is that crucial component of monitoring and updating your plan regularly.
- Misinformation or misperception can derail even the best intentions. There are a multitude of financial planning myths floating around, but the following are some of the most common I/we come across.
- Financial professionals like myself have many ways of engaging with our clients in order to find the most cost-effective and appropriate solutions. Don’t rule out financial guidance and the opportunity to minimize your financial stress based on this myth, which is largely a result of Myth #1—that only the wealthy need planning.
- There are websites available to help you with some of your less complicated calculations and goals. You may want to investigate these—remembering to always keep the purpose behind your goals in mind—as a starting point. You will likely find that there are areas where you need additional guidance and support, whether it is in the form of a written financial plan or expert consultation on specific topics.
- You can take control of your financial life and proactively relieve anxiety without having to go it alone. There are lots of helpful sites and resources, but none of them can take the place of expert financial guidance from a qualified professional. Isn’t it about time you stopped letting the market control your thoughts and you started controlling your own actions?
- Call us to start taking control of your financial life and to begin charting the road map to your financial future and a less-stressed state of mind.