3 min read

Charting a New Course for Your Financial Plan

Featured Image

With the election over, new administration and a potentially divided Congress, there are a lot of reasons to worry about what 2021 will bring. The Fed is committed to low yields and higher inflation; tax policy could see revisions; stimulus is yet to be determined. As the economy recovers, we are likely to see higher prices as businesses retool and pass higher costs along to consumers.
None of that sounds like good news for retirement plans that were set up in a very different economic environment. But is that true in practice?

Financial Plans Should be All-Weather

The goal of holistic financial planning is to take into account all aspects of your financial life to build a plan that works for your goals – no matter what the political, economic or market environment is like.

But the best plan is only as good as the investor’s comfort with following it and staying invested. We think about investing for retirement across several dimensions, but they all lead back to creating a consistent income stream – which is key for living the life you want in retirement.

Tax Efficiency

Planning for an environment in which taxes may be higher requires flexibility and the deployment of various tools – but a good retirement plan should already have taken these into account. Before we think about what to invest in, we map out a plan for tax efficiency by creatively thinking about how we deploy assets in both taxable and tax-deferred accounts. This keeps your assets aligned with when and how you need to drawdown income, in the most tax-efficient way. Over the course of your retirement, it can add significantly to return.

Given the potential for increases in taxes – whether estate, capital gains, or income taxes – we can deploy tools such as trusts and tax-loss harvesting.

Creating Income

A successful retirement is all about creating the balance between enough income to live the life you want, while preserving capital so the income stream will exist for your entire retirement. Consistency of returns is the best way we know to create a stable income stream – no matter what the interest rate environment is. But to create consistent returns, risk management is critical. Our process centers on a belief that rules-based investing focused on analyzing past risk is a better predictor of the future than past returns are. The reason for this is diversification – identifying assets that are truly uncorrelated to one another, across investment cycles, creates a portfolio that can compensate for down markets.

Factoring in Complex Assets

Many of our clients have portfolios that encompass stock options, or concentrated stock positions that have been held for a very long time – resulting in a low cost basis. We’ve developed our models to focus on price, so that we can analyze any asset. We pair this with financial planning tools to ensure we are completely customizing each plan to ensure our clients assets continue to work for them.

Portfolio Flexibility is Paramount

As the economy changes, business models will change and adapt to our reality. The ability to identify those opportunities, and then shift allocations to take advantage of them while maintaining a risk tolerance, is a hallmark of our strategy.

The Bottom Line

A solid financial plan that can see you through retirement should be flexible enough to work proactively through changes and market cycles. But most importantly, investors should feel confident about their plan. That comes down to understanding risk tolerances, building in flexibility to accommodate changes, and most of all – listening to our clients and deploying a plan that they understand at every step of the way.

We would love to offer you a free consultation. Click below to get started.

Let's Talk

 

 

 

We Deliver Content Like This Every Month to Your Inbox. Sign Up to Start Receiving Updates