Financial Planning and the Value of the Advisor

They say that it is not the destination but the journey that matters. Since 1980, our firm has continued to evolve to make that journey as seamless as possible for our clients. That evolution has now taken the shape of what we call our Wealth Bridge, a comprehensive and coherent process that covers every important aspect of your financial life. It’s the process we believe individuals need to achieve their goals, exemplified in the story below:

On a stormy night, a lost traveler is in search of protection from the elements. In the distance, he sees a beacon of light and hastens through a forest towards the source. As he reaches a cliff at the edge of the forest, he sees that this beacon is a lighthouse in the middle of the ocean. About 500 feet to his right stands a long wooden bridge that connects the cliff to the lighthouse. He feels relieved that his safety is within his sights. However, given the ferocity of the storm, to reach his sanctuary the traveler must trust that the bridge will hold as he approaches the lighthouse.

As he surveys the bridge, he sees that it has twelve pillars supporting its structure. Without them, the bridge does not stand. If one were to fall, it may not be enough to cause collapse, but it begins to put the entire structure at risk. Each of these pillars represents an important financial decision (tax planning, estate planning, insurance planning, etc.) that you will need to address at some point in your life. Some will need to be addressed sooner than others. The traveler cannot reach the next pillar unless the one before it has supported him along the way.

Strong though the pillars may be, there is still too much length between them for the traveler to jump from one pillar to the next. It is only the planks between them that allow the traveler to move forward. The planks between each pillar are smaller in comparison and less significant individually but as a group they perform a function equal to those of the pillars. Any plank that is missing or does not support his weight will not cause him to fall to the ocean but will certainly leave him worse off than he was the previous step. These planks represent the smaller financial decisions (buy vs. lease, gifting to children, POA, etc.) you will need to make between each pillar, and the nails holding those planks in place represent the tools you may need to use to support those smaller decisions.

Upon inspection, the traveler decides that the bridge is sturdy and will support his every step to that lighthouse despite the storm. However, it is certainly possible that he will underestimate the power that Mother Nature may have on this journey. The waves below represent the uncertainty that comes up throughout the financial decision-making process. It’s possible that he will walk between many pillars without any turbulence below. However, an unexpected wave may cause him to lose his balance.

Thankfully, when this occurs, there is a railing on either side of him. Even with all the support below him, if a large wave causes the bridge to rock it may be the only thing that will allow him to regain his composure in a moment of terror. This represents the value a trusted advisor can provide. Always there even if they’re not always needed. A third layer of support that could be the difference between staying on course and falling off your bridge. It’s possible that the traveler could make it from the shore to the lighthouse without having those railings next to him. But for this traveler, it is comforting to know that they are there with him every step of the way.

Imagine the wave of relief that washes over the traveler as he reaches his sanctuary. He may look back at his path to acknowledge that it may not have been easy or assured but that it was worth it. What lies inside gives him the safety and security he wanted.

Our firm believes that this story can be applied to any financial decision you have to make. As an example, perhaps the most common financial decision surrounds the question, “When can I afford to retire?” To effectively answer that question, you’ll have to go through the retirement planning process (Pillar). One step in that process is analyzing your Social Security benefits (Plank). You’ll need to know not only what your benefit is but when it is optimal for you to file. To make the right decision, you’ll probably need to utilize both people and tools (Nails). You might call the Social Security Administration to learn about your different benefit amounts, but you might also need software to analyze what combination of filing options is best for you and your spouse. Unfortunately, your filing date is still several years away, and you’ve read that future Social Security benefits may be reduced (Waves). You’re no expert on the subject but you trust your advisor to survey the landscape for you (Railing). You’d like your advisor to do research on the likelihood of reduced benefits, so that you don’t have to. You may not have needed your advisor for this 20 years ago, but you do now.

Conversely, the perils of not planning properly are equally as relevant. You may move swiftly from pillar to pillar, hitting every plank along the way, but if the foundation crumbles at any point before you reach your lighthouse it can destroy the progress you’ve left behind you. For instance, you may have properly planned your taxes, maximized the upside of your investments, and properly documented your estate plan. However, you’ll notice that cybersecurity is one of the last pillars before your lighthouse. If you do not plan properly, falling victim to an act of cybercrime can destroy years and years of progress and planning.

Here at McCabe, we feel that a properly constructed Wealth Bridge is the best way to ensure a safe path to financial security (Lighthouse). We recognize that this security is specific to every individual. However, when most look back at the bridge behind them they are hoping for the satisfaction that they were able make smart choices, afford a comfortable standard of life, protect those closest to them, and if possible, leave something behind for family, friends, or charitable endeavors. It may be true that it is the journey and not the destination that matters. However, when it comes to financial planning, it is only when you know what you want your destination to look like that you can begin to plan the journey.