In life, we typically pursue goals that are of utmost importance to us. We hope that if we do certain things today, positive things come tomorrow. The challenge with many of the people I have encountered is that they are wonderful at dreaming of a bright tomorrow but seem to never quite lay out a list of steps that can get them there. Why is this? I would posit that many simply lack a way to account for life’s variables reasonably and methodically. From a financial perspective, taxes, inflation, and fickle markets can be hard to account for. From a personal perspective, there are innumerable variables with health, cost of living, income stability, family, and day-to-day life challenges. With only so many hours in the day and a lot of competition for our attention, the financial plan seems to never quite get to the top of the pile for many trying to do this on their own.
This is really when the art of the possible begins to unfurl. Most adults can use a spreadsheet, but even experts sometimes falter when dealing with the moving targets mentioned above. This is where technology really shines. There are many tools available for this type of exercise. The key factor is making sure that what you see as an ending marker is tax, inflation, market, and legislation adjusted so that you have some idea that what you are seeing is accurate.
Now we need to get creative. We have to objectively look at the outcome. In the case of the family mentioned earlier, the results were the best kind of surprise to them. They had no idea that their hard work and determination would yield the results they were seeing. They had no idea what was possible, so they also had no way of planning for it. At first glance, it’s easy to think that having a big number at the bottom of the last page of the reports is a good thing and we can just stop there. We suggest challenging yourself and your family by asking several soul-searching questions. Only by looking inward can we embrace the art of the possible.
Once the baseline is complete, and you have started to contemplate many of the questions above, there will naturally be other questions about deviation from the norm. Again, this is where technology can really help us. It is a rare occasion when life allows things to go exactly as planned, so asking “what if” questions is critical in this phase. All families express concern over things that are relevant to them. For example, some families exhibit extreme longevity, so outliving their savings can be a risk. In other families, heredity can bring physical or mental infirmities that shorten life. The care required in such cases can put the nest egg in jeopardy. Many families like the one we have mentioned throughout this post have a strong financial commitment to seeing their children receive an excellent education. The point is that everyone will feel risks differently and each family will need to create strategies to address what they feel are the most significant risks to them.
One of CWA’s great capacities is facilitating the connections required to address these items. For example, the family mentioned above may need to consider life insurance to protect a surviving spouse’s ability to pay for the education they both want for their children. A family with incapacity concerns may need to consider entity ownership of their assets to mitigate institutional care costs. A family who wants to sponsor a large gathering for the extended family may want to consider long rentals of vacation property instead of purchasing a second parcel for this purpose. Each is a different scenario with different considerations. The true goal in scenario planning is to ensure that diligent work is done to name your family’s biggest concerns and goals. Once named, dominion can be earned over them, and plans can be made to mitigate and address concerns while pushing hard toward goals.
“The Art of The Possible” was a term I heard first from a colleague here at CWA. To me, it implies taking what is a very arithmetic, rich, and dry process like financial planning and breathing color and life into it. Helping our families build plans to address worries releases them from the stress of carrying those concerns around every day. It frees them up to consider happier outcomes. What can we do with our hard-earned wealth? What should we do to ensure our hard work permeates our family for generations to come? How do we empower our heirs and lengthen their reach versus shortening their reach by spoiling them too much? Have we lived our dreams fully? Financial planning in its noblest form should be a means to provide your family with the data needed to be able to formulate and address deep questions about now, later, and the hereafter. If your family has not taken part in this exercise, please consider doing so. I have rarely seen anyone walk away from the table feeling like it was a poor use of their time. Most of the families we work with feel validated, and excited about what their futures may hold. There is a sense of exhilaration to be garnered from taking hold of your destiny and impacting it with solid planning and teamwork. At CWA our motto is “Protect. Enhance. Enjoy.” This simple phrase embodies so much of the goodness that can come with thorough team-based financial planning. As always, if this article sparked curiosity or concern, please do not hesitate to reach out to us and schedule a conversation.