Times Like These: Why Clear Financial Objectives Are So Important

In Articles, Estate Planning, Income Planning, Investment Management, Long Term Care, Social Security, Tax Planning, Weekly Articles by Adam Cufr

When I first began doing this work, a bit more than 15 years ago, I’d managed to arrange meetings with a number of very serious athletic coaches (one of whom has become quite successful) in an effort to gain new clients. At that time, a pulse was all that was required to get my attention, since starting in this business is so difficult. The fact that I was meeting with these folks was pretty exciting.

During one of the conversations, the coach I was meeting with received a phone call and had to go to another room to take it. When he returned, we continued our discussion. I asked him a very important question, “What are your expectations with your investments?” He replied, “I expect to receive 300% returns on my money.” I shot back, “In what timeframe?” “Every year.” He then was interrupted again, this time to tend to an issue with a player. Before he left the room again, I simply thanked him for his time and exited gracefully. We never spoke again.

I share this story for a couple of reasons; first, I couldn’t believe what I’d heard. How can he expect so much in such a short amount of time? Doesn’t he know that tripling one’s money each year just doesn’t happen in the real world? Incidentally, there are an alarming number of scandals involving former athletes luring their old teammates and coaches into fraudulent investing schemes. I thought about how easy it would have been to make promises to somebody who didn’t have the tools to discern what they’d heard. Finally, I can assure you that the gentleman did not have a great experience with the advisor who told him what he wanted to hear. 

As we consider where we are today; a very low, but rising interest rate environment, a historical high point in the stock market, a new president, and a technological and demographic sea-change, we must be very clear about that which we hope to achieve with our money. Expecting great growth without taking great risk is a recipe for disaster. Conversely, avoiding all risk because of fear or a short-term outlook, can also wreak havoc on one’s assets. Believing that nursing care is just for other people can also have nasty and unforeseen consequences.

Because of the realities of the world in which we live, the pain from lack of planning may be quite great for some. Therefore, it’s as important as ever to approach retirement planning with clear objectives. Ideally, giving each dollar a purpose and objective will allow you to avoid many of the traps that lie in-waiting for those who don’t look ahead.

One quick example involves interest rates. As historically low rates continue to rise, that puts pressure on bond and real estate values. Since bonds have been viewed as the “safe” investment within most 401(k) plans, what will happen to retirement plan values in this rising-rate environment? Should you move to a higher percentage of stocks instead? What about the risk of a volatile stock market? Because of these realities, it’s a tough time to be an investor.

This is no time for alarm, yet prudent planning may ward off disappointing results and missed expectations. Just don’t be surprised when we ask you what your objectives are for your money. The clearer your answer, the better the plan.

Most of the families we serve are seeking reliability in their plans. “Will it get us there safely?” I say, tell me where ‘there’ is and I can show you the way.

All the best,
Adam Cufr Signature
Adam Cufr, RICP®