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What Makes a Successful Retirement Story

Chapter 1

What Makes a Successful Retirement Story

Successful retirement investment stories start with a plan. Not just an investment plan, but a comprehensive financial plan that considers clients’ finances, plans for retirement, their estate, any tax concerns, a proper risk evaluation … and, yes, investments. A financial advisor should also consider the what ifs – and plan for them.

This plan works best when established by an independent, fee-only, fiduciary financial advisor who has a legal obligation to work in the client’s best interest. This way, there are no conflicts of interests, no sales quotas and no board of supervisors to report to.

The best retirement stories also start early – the sooner you can put a financial plan in place, the sooner you start putting money away, and the more time you have for your wealth to grow. Waiting only puts your wealth at risk.

The best laid plans also involve a team of professionals, including a financial advisor, an accountant and an estate attorney. When all of these people work under one roof, the coordination needed to put the plan together is less complicated. Everyone on your team is aware of the same goals, fears and issues that you may have.

Unfortunately, we have a lot of clients who came to Global View for help after initially working with the wrong advisor and implementing the wrong strategies. We do our best to clean up after these mistakes. We also try to make sure their heirs don’t make the same mistakes they did.

Full-service ongoing investment advisory services are most beneficial to setting clients on the right path, because investment management, financial planning, tax planning and estate planning are closely linked and work together.

After a record bull market in stocks and bonds, investors need to take advantage of every opportunity they have. Choosing the right financial team to work with is a decision that should not be taken lightly. Do your homework and get it right the first time!

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Chapter 2

Financial Planning

The first and most obvious step to financial planning is creating a comprehensive financial plan. This should act as your roadmap to the life you want. But remember, not all financial plans are created equal.

Some advisors will create excellent financial plans, but they end up sitting on a shelf, unimplemented and never reviewed. This is not a good idea. A financial plan should be reviewed at least annually to make sure it still works as your life evolves.

Like a good road map, a financial plan should also mark your progress and help motivate you to stay on track. Obstacles will arise, but sometimes a simple plan modification is all you need to stay on track to achieving your goals.

At the core, a financial plan will help ensure you won’t:

  • Outlive your assets
  • Incur avoidable yet permanent losses
  • Leave your spouse without the means for a happy retirement

Annuity Straight Talk

Chapter 3

Retirement Planning

Many people think financial planning and retirement planning are one of the same. While they are very similar, they are two different processes.

Comprehensive financial planning should encompass everything, from when you start putting money away (in your 20s if you can) to when you pass away. It should address things like:

  • Budgeting
  • Saving for personal goals, such as paying for your children’s education
  • Affording new expenses related to life-changing events, such as having a baby, getting married or getting divorced
  • Establishing an estate plan

Retirement planning is a form of financial planning, but it’s focused only on one section of life: Retirement.

  • How will you afford retirement?
  • What are your costs in retirement?
  • What are your income sources in retirement?
  • How do you plan to spend your days in retirement?

Retirement planning specifically focuses on the time in your life when you are no longer bringing home a paycheck. This is an important, and often complex, time to plan for. You have to consider:

  • Social Security benefits
  • Medicare
  • Investment withdrawals

It’s important to plan for retirement before the time comes. Unfortunately, many people assume they’ll be able to enjoy retirement but don’t have a plan in place to make that possible.

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Chapter 4

Estate Planning

We say this all the time: If you don’t have an estate plan in place and you pass away, the state in which you live will have a plan for you. And chances are, you won’t like it!

Estate planning is an important part of financial planning. Not only does it give you the opportunity to create an easy, comfortable and relaxing retirement for yourself, but you can also ensure that the wealth you worked hard to accumulate is passed on as you wish upon your death.

Estate planning is more than just slapping names on items and assets in your home. Estate planning allows you to leave your loved ones an inheritance in a tax-efficient and asset-protected manner. It’s also important to discuss your wishes if you become incapable, either mentally or physically, to care for yourself any longer.

Common Estate Planning Mistakes

Chapter 5

Tax Planning

Tax planning is another often misunderstood benefit. Sure, an accountant can be of extreme help as tax time approaches, but a good accountant can also help you in ways you may not have considered.

For example, have you thought about taking advantage of tax-deferral strategies to help better prepare yourself for retirement later in life? This is one of the most important things an investor can do. And without an accountant’s help, investors often miss these opportunities, and therefore, miss another opportunity to maximize their total wealth (after taxes).

Remember: Like financial advisors, not all accountants are the same. Some accountants won’t put their clients’ best interests first and instead focus on their own personal workload – they want to minimize taxes but also ease the effort it requires to perform their tax preparation. If you’re working with an accountant like this, he or she may overlook serious investor pitfalls.

Tax planning is also important in estate planning and retirement planning, since there are different laws for each retirement plan and estate document. And they change depending on the state (and sometimes area) where you live. For example, estate and tax laws are different in the Carolinas than in other places. Make sure your accountant understands what’s best for you.

The Process of Tax Planning: 5 Things You Should Know

Chapter 6

A Proper Risk Assessment

Risk is the foundation to a good comprehensive financial plan.

When markets are good, investors believe they have a higher tolerance to risk. But after markets fall, they get conservative. This can be expensive. And you may not have the opportunity to make back the money that was lost.

Unfortunately, this happens all the time.

Risk management may be the most important thing a financial advisor does, but in many situations, a person’s risk will be decided on a simple 5-step questionnaire.

At Global View, we view risk management as a serious, ongoing responsibility. We make sure we have a valid assessment of each client’s risk tolerance, that we know their capacity to bear risk (and what this means to their odds of achieving their goals) and that we discuss this risk on a regular basis. We build modeling into every financial plan to give clients an idea of what types of risk actually look like in real terms.

A proper risk assessment is crucial. Don’t take this step lightly.

Is It Time to Re-Evaluate Your Risk?

Chapter 7

Portfolio Management

Investing can be stressful for the average person. There are market swings, politics and trade wars. It makes sense that investors worry. But making emotional decisions when it comes to your investments is extremely dangerous. Talk with a financial advisor about a strategy.

Think back to 2008. Or the collapse of the dot com bubble. Most investors lost money when they reacted emotionally or attempted to time the market. Our clients, educated on what to expect, fared much better.

Behavioral economists have demonstrated that the reason investors perform poorly is due to natural human biases. So don’t go it alone. There can be expensive and sometimes life-changing effects for bad decisions.

Why Investors Need to Start Thinking Globally

Chapter 8

What to Avoid

Not all financial plans, financial advisors or financial firms are created equal. There are many things to watch for. And many hidden agendas that you want to avoid!

Financial plans by the big brand name Wall Street firms, for example, are designed to support the firm. These plans can be overly complicated and worse, focus on selling products the firm offers.

You will want to avoid:

  • Commission-based or fee-based advisors (these advisors have major conflicts of interest)
  • Insurance agents and insurance firms (again, many of these companies will work in their best interests; not yours)
  • “Free” advice (why would someone ever work for free?)
  • Complicated communications that you don’t understand
  • Advisors who do not stay in contact with you

Instead, look for:

  • Fee-only financial advisors
  • Fiduciaries
  • Independent firms
  • Easy communication avenues

Do your homework. After all, it’s your nest egg (and your retirement story) that’s at stake!

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