Want a great financial plan? All you need are the clues
Solving puzzles is in my blood.
Growing up, solving jigsaw puzzles was one of our favorite family activities, and there was always a puzzle in the works on our card table. Sometimes we would work on them together, huddled over the still-broken image as we searched for the right shape, the right color, or the perfect edge. Just as often, any one of us walking by would spot a perfect fit and happily pop a piece into its rightful place.
Sunday brought with it a different challenge: the delivery of the Sunday crossword. My parents would work on it together (always in pencil), and we’d all try to help—even if it took us days to get the answers right. Even today, the New York Times online crosswords are a bit of an obsession for me. I love the challenge. I love the form. And I love that I’m always learning something new. (Today’s tidbit: Napoleon died in exile on the island of St. Helena. Who knew?!)
I suppose it’s no wonder I became a financial advisor… and that I love what I do.
The exciting thing about financial planning (at least for a puzzle geek like me) is that, just like for jigsaw and crossword puzzles, the process is all about uncovering a solution based on a set of clues. The more clues you have, the more context. And the more context, the easier it is to find the solution.
Julia is in her mid-40s and owns a fast-growing small business in Laguna Beach. Julia was referred to me by one of my long-time clients, and I could tell from the moment I met her that she is a smart businesswoman. But like many busy business owners, she has never really focused on her personal finances. I was excited to sit down with her and dive into her first-ever financial plan and start solving her financial puzzle.
When we met in January, my first question was, “What do you spend your money on each month?” Like many first-timers, she didn’t have an easy answer. She knew her annual income. She knew how much she had in her current investments. But she didn’t have a real sense of her expenses, how much she had remaining to spend as she pleased each month, or what she could (or should) be doing with her excess cash. Luckily, she had done her homework for our meeting, including gathering together all of the fragments of her finances. Her tax returns, her bank and investment statements, and (most importantly) her goals and dreams for the future. With her file box on the table, we had all the clues and context we needed to move forward.
Fast-forward to March, and Julia’s financial picture looks a whole lot more complete than it did just 8 weeks ago. The pieces had been there, but she’d had no idea where to put them, how they worked as a whole, or (and this is a big one) how each piece impacted the others. By working with the clues, we were able to puzzle out solutions to her key challenges, including:
- How her spending habits were impacting her ability to save for a long retirement—and the tradeoffs she needed to make in both areas.
- How she could balance investments in her business with other investments to diversify her assets and ensure she won’t have to depend solely on income from her business in retirement.
- How her investments could be restructured to leverage her savings and better protect her from risk.
Julia has already made a ton of progress, but she’s still “piecing together the edges.” There’s much more to be done, and we’re working together to discover new clues and uncover solutions to each challenge we see. She has clearly defined her goals and can see the path forward, and I am helping her understand how all the pieces work together—and how we can adjust them to fit when they don’t. I hope Julia is having just as much fun as I am.
Julia thought she needed to put off working with an advisor until she “had all the pieces in order.” I wish she hadn’t waited! Now she understands that, just like most other puzzles in life, sound financial planning doesn’t require having 100% of the facts to start making better, wiser decisions. All you need to start solving your puzzle is your own set of financial clues. An advisor’s job is to use her experience and knowledge to see clues through a different lens and, ultimately, create a step-by-step plan to help you reach your goals. For me, that’s (at least!) half the fun.