General Dwight Eisenhower is famously credited with the saying, “No plan survives contact with the enemy.” And while it is certainly true that evolving circumstances often force us to change carefully crafted plans, it is also the case that having a plan is still the most important part of achieving life’s most important goals. Actually, the crucial aspect of a plan is not its infallibility or ability to resist change; it is the thinking and prioritizing involved in its creation. When we plan, we think carefully about what we want to accomplish, what success looks like, and what steps might be required to reach our desired destination. By having these fundamental principles in mind, we’re usually better able to adapt as needed to changing circumstances while keeping the principal values and goals in mind.
For those who intend to build wealth, having a plan in place is vital. So, as we enter another new year, it seems appropriate to consider some basics of efficient and effective planning for your financial goals.
Your Plan Should Start with Your “Why”
At the outset, we should remember that, while money can’t buy happiness, it can certainly give you choices. The fact is that money, though it is necessary for most of the things we care about in life, isn’t really what most of us care about. We care about security; we care about helping those we love; we care about having meaningful experiences. None of those are monetary, strictly speaking, but money is certainly involved.
In 2011, researchers at Boston College conducted a study of 165 very wealthy households (net worth of $25 million or more, average net worth $78 million). Funded by Wachovia Wealth Management and by the Gates and Templeton foundations, researchers wanted to learn, among other things, what sort of things the very wealthy worry about. Though we might expect their concerns to center on financial threats or concerns—taxes, unfavorable legislation, or similar matters—the surprising fact that emerges from participants’ comments is that most of their worries are not primarily financial. They worry about the safety of their families; about the quality (or scarcity) of authentic relationships; about the loneliness and isolation they often feel; about the lack of understanding frequently exhibited by others. In other words, the very wealthy are much more concerned with the “why” than the “how.”
This suggests that the most important feature of your wealth planning may be your “why”: What are the values and beliefs that undergird your life and efforts? What are the causes that you care most about? What are the core needs of the people who mean the most to you? What kind of impact do you hope to leave behind for your family and the greater society? Seeking answers to questions like these as you set your financial goals for the year can result in a plan that is uniquely tailored to your core beliefs and values, making it more integral to all aspects of your life, both financial and non-financial. Such a plan also lends itself to pursuit with greater commitment; when the goals are tied to your personal values, they mean more.
Your Plan Should Include Short-, Medium-, and Long-Term Goals
- Short-term goals are things you hope to achieve in the next 1–3 years and might include items like establishing or revising your estate plan, improving the tax-efficiency of your portfolio, or reviewing your risk-management program.
- Medium-term goals typically have a timeline of 3–10 years and might encompass completion of funding for a trust, establishment of a philanthropic effort, or selling a business.
- Long-term goals are those that may require 10 or more years for completion and might include achieving a desired balance in a retirement account, funding education for young children, or paying off a mortgage or other debt.
For each goal, try to establish a dollar amount (if applicable) and a completion date. As already mentioned, circumstances may sometimes require you to change some of these details, but you’ll typically accomplish much more if you make your goals as specific and measurable as possible.
Involve Your Professional Team in Your Planning
Especially for those with significant wealth, it is important to have the right professional team in place. Matters like risk management, tax efficiency, legal structures, and portfolio management often involve specialized knowledge that can be supplied by qualified, fiduciary professionals. Your professional team can act as your financial planning “coaching staff,” helping you stay on track with your current goals and also helping you watch the horizon for developing liabilities, threats, and opportunities. They can also work with you to hone your goals and better integrate them with your “why.” Ultimately, your financial advising and wealth management team can help you translate your values and priorities into actionable, specific strategies that align with your unique situation.
At Optima Asset Management, we specialize in becoming your dedicated “chief financial officer.” Whether your goals include leaving a philanthropic legacy, securing a multigenerational financial structure, or simply building wealth for a secure retirement, we are here to help, advise, and guide.
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