By Scott Brown EBS CONTRIBUTOR
During these rapidly changing COVID-19 times, I am reminded of a few great quotes from “the father of American literature” and author of “The Great American Novel”, Mark Twain. The first quote of Twain’s that I find applicable today is “Facts are stubborn things, but statistics are pliable.”
It seems that statistics concerning every facet of the pandemic are changing daily. These statistics are being used as pawns in our game of life by politicians which brings in to focus another quote “Our lives, liberty and our property are never in greater danger then when Congress is in session.” Of course, these statistics are also being used by medical professionals, the media, citizens who support the lockdowns and social distancing and by citizens who oppose these policies and want to fully reopen our economy. The danger with much of this behavior is it’s being driven by statistics, not facts.
As a financial planner, I assist my clients with things they can control and things based on known certainties or facts. This is precisely why the cornerstone of my client relationships are a comprehensive financial plan. With that said, as an investment manager, and asset class investor myself, statistics play a vital role in my profession, as they do in many other professions and decisions people, companies, other organizations and governments make every day.
As such, I don’t envy our leaders who are facing these challenges. I can only hope, along with the rest of you, that we as a nation are already preparing and planning for our next inevitable crisis.
At its core, financial planning helps families, individuals and businesses plan and prepare for short and long-term goals as well as life’s ups, downs and uncertainties. Very simply, it is a valuable tool that can assist in better understanding goals, resources to accomplish those goals and how to prioritize both.
Goals could include building an adequate cash reserve, taking vacations, pursuing hobbies, protecting loved ones, purchasing a home, sending kids to college, business continuity, retirement and leaving a legacy. Your resources include total household or business income, savings, investments, real estate holdings, business holdings and inheritance. Once you have identified both goals and resources you are able to develop a financial plan.
Ultimately, the plan is a process or a living and breathing document that can be massaged, and manipulated as your goals, resources and realities change. It is fluid and flexible so that it can change as your life priorities change.
The planning process will identify how goals will be funded and what investment strategies should be considered to reach your goals. It outlines how those strategies should be implemented and monitors your progress towards your goals. Over time it will review existing goals and identify new ones. In our practice, we review these plans at least annually for each client.
In the end, a comprehensive financial plan will give you confidence. It’s similar to the confidence you achieve once you’ve mastered skiing a challenging run. You stand over the entrance knowing how important that first turn is, core engaged, standing strong on your downhill ski, then jumping into the next beautiful arc!
As we continue to navigate our new abnormal, and we hear opinions espoused at how this time is different, I am recalling one last Twain quote, “History doesn’t repeat itself but it often rhymes.” As always, stay safe, be well and never forget to set your sites on your goals and keep enjoying the ride!
Scott L. Brown is the cofounder and managing principal of Shore to Summit Wealth Management. His wealth management career spans more than 25 years and he currently works and lives in Bozeman with his wife and two sons.