Start with WHY, The New Wealth Planning Reality

Aug 07

One of the unique differences in wealth planning at TAMMA is that we often start with “Why” when we are developing wealth plans for our clients.  Starting with why helps to set the foundation for which the wealth planning process is built on.  Once we determine the why, we can focus on how we invest our time, energy, and, yes, our money to consciously create the life you want.

The planning process can begin by following these three steps:

  1. Decide what is meaningful in your life.
  2. Begin looking at innovative ways to use your resources (money, time, and ability) to purchase the life you want.
  3. Partner with those people who can help you articulate and achieve your goals.

I want to particularly focus on the first step which gets back to starting with why.  Professor Scott Galloway, at NYC Stern, recently wrote, “Studies show people overestimate the amount of happiness things will bring them, and underestimate the long-term positive effect of experiences. Drive a Hyundai, and take your wife to St Barths.”  This point hit home for me because once again it proves that although wealth planning involves saving for the future to be able to do the things that you want to do, it also means figuring out the things that you want to do now to live the life that you want.

Successful wealth planning I have found requires three critical elements;

  1. Vision – the ability to map out visually the options for what your life could look like,
  2. Balance – living the life that you want now and saving for the life that lies ahead, and
  3. Discipline – the ability to execute on a well thought out plan.

Mitch Anthony, who is an expert in the field of financial life planning, has defined the standard for financial success as your Return on Life (ROL).  Expressed a different way, “How well are you doing on living the life you want with the money you have?” Having a vision, balance and discipline are all engrained with having a successful ROL.

Implied in the ROL approach to life are the following ROL indicators:

  • I’m living well within my means.
  • I’m saving with discipline.
  • I’m managing my risks with prudence
  • I’m investing time, energy, and resources in people and engagements that energize me.
  • I’m allowing myself to have experiences and live whenever possible.

The return on life concept is something that I have been working with people on as we develop alternative options to a traditional retirement plan.  Rather than continuing in a career that has provided the financial well-being to raise a family but has not provided a vocation, people can opt to change direction and engage in a “second” career that is more fulfilling because they have the freedom to be able to do it.  When work doesn’t feel like work, why stop when you hit some arbitrary age?

Planning can help provide peace of mind that comes with having options and knowing where you are on the roadmap.  It helps to provide direction in times when difficult transitions can occur such as a job loss, a difficult health diagnosis, or unexpected death of a loved one.  One way to look at life is that it is a series of transitions.  How well we manage life’s transitions, results in how fulfilled and happy we can expect to be.