Your Money & Your Life
Steven Covey, Financial Planner
Today, the late author and lecturer joins the ranks of those I have previously suggested (Warren Buffett, Groucho Marx, and Fred Rogers) as honorary financial planners, even though none have passed the exam required for certification.
Covey came to mind recently after I’d spent a half-hour studying an unsolicited offer on a home that a client was selling. I was going over the details, trying to make sure she was going to be able to get top dollar for it, when I realized I was making one of the classic mistakes in financial planning. I was looking at the trees when my job was to pay attention to the forest. Her financial situation had changed. Our goal was to get rid of the old home as quickly as possible to simplify her life, not squeeze every penny out of the sale. Instead of looking for ways to get her a few more dollars, I should have offered to help the buyers get a mortgage, tried to speed up the inspection process, or prepared a FedEx envelope to overnight the paperwork—really anything to get the deal wrapped up.
This is a mistake I don’t often make because situations like this are fairly common in our offices. People come in for advice about a specific topic, but as we begin talking, I realize there’s something else that needs to be addressed first. Perhaps they ask about exact trust language when it’s not clear at all that a trust is necessary, or about investment strategies when they have young children but no will. No doubt you’re familiar with the medical concept of triage. The same process is employed at DCM—listening carefully to identify the most important issue, addressing it first, and then so on down the line.
Since DCM is a firm employing more than twenty CERTIFIED FINANCIAL PLANNER® certificants, people often come in with financial (typically investment) questions on their minds. I’m pretty good at those and usually have advice to offer, but day in and day out, there’s much more to the process. To offer the best in financial planning, I often get involved in various aspects of risk management as well. Sometimes, it’s helping clients decide on appropriate amounts of insurance and shopping for it. Later in life, I might work with clients to decide whether to “age-proof” their home or move to a more accommodating location.
Of course, there’s more to planning than investments and risk management. Helping clients budget for retirement plan contributions and suggesting which of the available investment strategies makes the most sense is core to my work. Managing cash flow is also a consideration. While we want our clients to enjoy the fruits of their labors, we also want them to save for unexpected expenses and eventual retirement. I have a simple approach to this—I just want to see a balanced monthly budget. It’s been my experience that pretty much anyone can spend less day-to-day if they see the need to fund a longer-term goal such as an emergency fund, a child’s education, or their own retirement.
It's said that nothing’s certain but death and taxes. Planning for both is integral to a CFP®’s work on behalf of most clients. Whether someone does their own taxes or uses a professional, I try to make sure an appropriately tax-efficient investment approach is in place and that due consideration is being given to retirement plan distributions and other tax-sensitive decisions. I believe our planning software is generally good at highlighting these issues, but our team of planners goes over every plan together before any suggestions are presented to a client. Likewise, most people need help with estate planning. Again, the initial question might relate to some nuance in the language, but, as always, my goal is to make sure the most important issues are addressed first. I am not an attorney. I don’t give legal advice or prepare estate planning documents, but I generally know my clients very well, so I can often be helpful in making sure the documents accurately reflect their wishes.
In closing, let me share the reason I propose Covey as today’s honorary financial planner. The second of his Seven Habits of Highly Effective People is “Begin with the End in Mind,” an excellent “habit” for both personal and professional financial planning.
Warren Ward, CFP®
Senior Investment Advisor
To learn more about Warren, you can read a brief biography here.
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