People ask me all the time what I do for a living. So when I say, “I’m in investment management, financial planning, tax planning and estate planning,” it either makes people worried that I’m going to try to sell them something or it puts them to sleep. It doesn’t always do justice to what we think is the core of what we do. We sum it up by saying we get paid to worry so that you don’t have to. My dad, Jim Meredith, has said this for decades.
We Get Paid to Know
The world has become so complex with tax laws, various investments, volatility, computer trading, high frequency trading and Wall Street banks. Every day there is a new headline to worry about. We understand that we must accept it. We also understand that one of the great risks is: not knowing what you don’t know. You may think you understand something that you actually don’t.
Nonetheless, we don’t expect our clients to know as much as we do. This is what we do for a living. We have teams of people solely dedicated to doing their part in the process: tax planning, insurance planning, investments or trading. What we focus on every minute of the day is financial planning. That’s what we are good at – and have been good at – for many years.
Basically, clients pay us to worry about things they may have never thought of. And that’s the key to it all. Some people know the obvious things like markets going up and down, but they don’t often think of things in terms of what happens if they get sick or die unexpectedly.
For a conservative investor, the markets might not be nearly as bad as they thought. For someone seeking high returns, the markets might be more volatile than expected. What if inflation is worse than they thought? What if Congress passes something that they either do or don’t need to worry about? Being an expert on this, I know that someone may either fail to act or overreact. And both of those are bad decisions.
We Have a Game Plan
We have found, historically, that investors do more permanent damage to themselves than the markets ever would. Part of what we do is to try to avoid that. I think the important part is the anticipation of these events.
Through the MASTERPLAN® process, we ask and answer the important questions. We don’t wait for it to happen and then ask, “So, how are we going to get out of this?”
We are upfront, asking: “What happens if Mr. Smith, or Mrs. Smith, dies? What happens if you both die?” We also ask, “What happens if inflation spikes during retirement?” “What happens if returns are lower than we expect?” We ask these questions on Day One, so that when these events do happen we’re prepared. Of course, they may not happen exactly as we anticipated, but if and when they do, we’ve got a leg up. We have an answer and a plan of action. We might have to modify and tweak it, but we have a game plan.
If you are working with a professional and the relationship is focused only on investments, like how you did versus the S&P 500, that’s where the conversation begins and ends.
You haven’t placed your investments in the context of the most important questions: “How much do you need to earn on your investments to do the things you want to do?” Or, “What is a sustainable withdrawal rate from my portfolio?” Or, “Do I have the proper legal documents in place?” “What if you get divorced?” “What if you get laid off from your job?” There are always questions to ask.
We Know That Not All Professionals Know
If a financial professional has not asked and answered these questions, they’re only doing investments – probably not even managing the investments – and even then they might outsource it to some other decision maker.
If you’re sitting in a room and your advisor has never gone through these scenarios, they’ve never done financial planning. So, what are they doing for you?
We know investments are just one part of the process – one spoke in the wheel of the MASTERPLAN® process. I don’t know how someone can recommend a portfolio or a mix of investments without answering these questions.
But I do know that if you need help deciphering what goes where and how much should go to this or to that, we can help you, your family, and your near and dear friends and neighbors too.
DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Baird does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.