Through Every Stage of Life Scott White Advisors is There for You
by A. Scott White, CFP® , ChFC® , CLU®
President, Scott White Advisors
After over a year of relatively unabated growth in stock markets around the world from November 2016 through January 2018, in the spring of 2018 we have witnessed a return to market gyrations. Some people are now asking me, “Isn’t it time to make some adjustments to my investment portfolio?” My answer to their question is, “Why now?” You see, at Scott White Advisors we do not build investment portfolios around events that may or may not happen. We build investment portfolios around our clients’ lives. And if our clients’ investment portfolios are built to navigate their families through each individual’s needs and circumstances regardless of market anxieties, then why would a change in an investment portfolio be warranted now?
When we begin to build investment portfolios, early in the process we start planning for the worst things that can happen and hope for the best. Since the worst thing we can imagine happening is that someone will die, we often begin our planning discussion around that topic. After all, if you die we have no more time to plan for anything else. In our planning process we answer questions such the ones listed below. All of these questions can be addressed with proper planning.
• How do you plan on passing the family fortune to the next generation?
• Is the process planned in an efficient manner to avoid unnecessary costly delays? Who will handle the administration tasks, and is that person qualified?
• Will there be enough liquidity to meet your goals?
• How will you provide your heirs the benefits the family fortune offers without the ability to blow it?
Studies have shown many beneficiaries of estates blow their inheritance. One study found that one-third of people who received an inheritance had negative savings within two years of the event. “The vast majority of people blew through it quickly,” said Jay Zagorsky, an economist and research scientist at The Ohio State University in Columbus, Ohio and author of the study, which was based on survey data from the Federal Reserve and a National Longitudinal Survey funded by the Bureau of Labor Statistics.1
From the title of this article, you might assume that in describing the financial planning process I would start at the beginning of life and work chronologically through life’s stages until I reach the end of life. But as we start the process, I prefer to address the most debilitating things that can happen. After death, the next worst thing I can think of happening to someone is that they become disabled or can’t take care of themselves. During a marriage, one spouse will often assume these duties should incapacity strike; however, who will provide these services for the surviving spouse? Are that spouse’s children grown, and do they live nearby? Often in Florida the surviving spouse’s children aren’t able to take on this role, and we’re required to plan on using professionals for care. How do we pay for professional care? Do we self-insure or purchase long term care insurance? When examining long term care insurance policies, please keep in mind that many are different, so it’s not always easy to compare them. We’ll assist you in finding the most appropriate plan to meet your family’s needs.
After we address planning for death, disability and the needs of the surviving spouse, the next topic we plan for is how to make it difficult to lose the fortune you have worked so hard to acquire. Many times, people overlook the importance of reviewing existing property and casualty insurance policies to determine if gaps in coverage exist and if deductibles are coordinated among their various policies.Once you have adequate insurance coverage, what other steps can we can to make it harder for someone to take your wealth away? Is your property titled correctly? Do you need the additional protection that a limited liability corporation can offer? And let’s not forget about the annual culprit that sucks our money from us – the IRS. We will review your tax returns annually to make sure we’re doing all we can to limit the negative impact the IRS can have on your family’s wealth. Also, we will help you choose the appropriate Medicare supplemental insurance coverage.
Once we’ve planned for your death, possible disability, and addressed how to make it difficult to lose your fortune to a natural disaster, a creditor, or the IRS, we’ll want to focus on the positive things you want to see happen in your life. For many people, that includes making sure they have a growing income stream in retirement to minimize the damage that inflation can cause on the purchasing power of retirement incomes. The first step in our planning is to make sure we select an appropriate retirement Social Security benefit option for your needs. Also, if you have a pension plan, we want to make sure we select a suitable pension benefit. Then we’ll discuss other goals, such as helping grandchildren with their college education, or perhaps planning for a special family event to celebrate a milestone.
To meet whatever goals you’d like to achieve, we’ll develop an investment strategy and provide you with a written investment policy statement that creates the frame-work for a well-diversified investment asset mix that can be expected to generate long-term returns at a level of risk acceptable to you. This framework describes an appropriate risk posture for the investment of your portfolio, specifies the target asset allocations, and establishes investment guidelines regarding the selection of investment managers, permissible securities and diversification of assets. It also specifies the criteria for evaluating the performance of your portfolio’s assets.
Finally, we’ll discuss how you want the world to know you once existed on this planet. Since we’ve already established how much you’ll need to accomplish your lifetime dreams and goals, how much wealth will remain? Is it appropriate to use some or all of this remainder to create a legacy? If so, we will begin the process of philanthropic planning. We’ll invite you to consider questions such as:
• What are the causes that are important to you?
• How do these reflect your values?
• Do you want to tackle a cause all at once, so you can witness the good deeds your gifts produce while you are alive? Or do you like the idea of establishing an endowment that will support your favorite causes long after you are gone? Or is a combination of the two right for you?
• Do you want your family to participate in selecting the causes that are important? Discussions along these lines have proven effective in opening a dialogue to allow grandparents the mechanism for sharing with future generations the values they treasure.
At Scott White Advisors, our planning process is designed to help you plan for all the stages of your life. We help you plan for the unexpected, as well as for your dreams and desires. Once we work with you to develop your plan, you have our ongoing commitment to help you review and revise it as needed. Our motto, Managing Wealth, Serving Generations reflects our commitment to helping you and your family through all of life’s stages. Please let me know how we can help your family.
1 One in three Americans Who Get an Inheritance Blow It by Elizabeth O’Brien, Market Watch September 3, 2015.