• David Day

Reassessing Your Financial Priorities for 2020 And Beyond

Updated: Aug 11



In a recent blog post, we emphasized that as financial advisors, we deliberately avoid making assumptions about our clients’ goals and priorities. Instead, we help clients with what we see as an ongoing process of discovery because as we move through different stages of life, and as circumstances change, what is essential or highly desirable often changes.

Since everyone has been forced to change the way we live due to COVID-19, now seems like a good time to talk about this process of discovering and re-prioritizing goals since it is vital to a genuinely productive financial advisory relationship. Traditionally, advisors and clients hold an annual review meeting to review investment performance and discuss progress toward achieving previously identified objectives, such as: building up college funds, paying down a mortgage, buying a vacation home, “retiring” early, and so much more. That traditional process is morphing into something new.

The Past Isn’t Prologue

We are now advocating starting from scratch each year. We avoid a priori assumptions about whether or not you still want to remodel the kitchen or plan for a trip around the world in a few years. This isn’t really due to COVID-19, but it is being brought to the fore by the pandemic as people realize priorities have changed. We have heard that many engaged couples have decided to get married in a simple, affordable ceremony. They are then able to use the money earmarked for their wedding for something else.

If you’re familiar with the concept of zero-based budgeting, it’s a similar idea. With zero-based budgeting, instead of saying, “We spent $X for Category Y last year, so we’ll use $X as the starting point for Category Y in this year’s budget,” we start over every time. We ask, “how important is Category Y today? Do we want to spend anything on Category Y, or has something else become much more important?”

Here’s an example. A couple in their late 60s had been contributing a few thousand dollars to each of their five grandchildren’s college savings accounts for several years. Instead of assuming they wanted to do something similar this year, we asked whether this was still a priority and how they are feeling (yes, feelings) about what these financial contributions were accomplishing. The couple realized that while helping their grandchildren in this way had a priority of “5” on a scale of “1 to 10”, there was one grandchild who, due to some special needs and circumstances, would likely need much more assistance. After reassessing their desire to help their grandchildren, they determined it would give them more satisfaction to support that particular grandchild more. By quantifying their priorities using this methodology, they decided to scale back the amounts given to the other grandchildren in favor of making a more substantial contribution to the one with special needs.

How to Dig

How do we draw this out of people? Or, how can you start to dig in and begin to identify your priorities? One way is to write down a list of the things you want to have or do in life that requires financial means. Then, rank them. Gulp. It’s the ranking part that’s difficult, but it’s one way to force yourself to identify what is valuable to you at this moment in your life. That doesn’t mean the list and rankings can’t change in the months and years ahead, they probably will, and it doesn’t mean you can’t achieve most or even everything on your list.

To help with the ranking process, ask yourself, “What would it mean to me, at an emotional level, to be able to achieve that goal?” Close your eyes and imagine that this thing has already happened – how does that make you feel? Comparing the feelings that come up when you sit quietly for a few moments and consider each item on your list can help you to prioritize them. This type of self-reflection can be outside of some people’s comfort zone, but it’s absolutely worth the effort. Without this deliberate concentration on determining what matters most to you and why your advisor’s financial planning efforts could be directed toward the wrong things. In other words, financial planning can show you the best way to work toward the prioritized goals on your list, but actual financial advisory work starts before that by helping you to build a list of desired outcomes that is both thoughtful and comprehensive.

Valuable Discoveries

Our goal is to figure out your aspirational desires, even if that includes something that seems out of reach. Maybe it is, but perhaps it isn’t. Here are some examples of how working through this exercise changed people’s objectives and priorities:

  • A couple had long talked about wanting a second home in Portugal. Now with a grandchild on the way, their priorities changed. They still plan to visit Portugal frequently but will use the money they would have spent on the second home to expand and remodel their primary residence in Colorado.

  • One half of a married couple had always dreamed of getting a private pilot’s license, but the other half didn’t realize it was actually a top priority. Going through the ranking exercise brought this out, and they worked with their advisor to make flying lessons and ongoing airplane rentals part of their budget.

  • A couple’s dream of buying a vacation home in Costa Rica turned out to be, in truth, a goal of creating a “wellness retreat” non-profit or business where people could do yoga, obtain alternative healing treatments, etc.

  • After discussing the specifics of buying and owning an RV to visit National Parks across the U.S., a couple and their advisor decided to increase the estimated expenses associated with accomplishing that goal.

  • A woman with substantial savings, no debt, and a frugal lifestyle had been eying an expensive bicycle. Still, she couldn’t spend that much on something that seemed unnecessary and borderline frivolous. By going through this process, she was able to give herself “permission” to do so right now.

  • An unmarried entrepreneur in great financial shape said his top priority was getting married and having a family. Still, he almost didn’t mention it because he had not considered that a financial advisor would be able to help with that. We were able to deliver value by merely pointing out that his other goal of starting another new business wouldn’t leave much time for finding a wonderful life partner and starting a family with her. In other words, he didn’t realize that these two goals were in conflict with one another and that his current plan of action could steer him away from the path that led to achieving what he really wanted more than anything else.

There are many critical benefits of having this conversation, what we deem as an “Outcomes Discussion,” with your financial advisor:

  1. Clarity – people might have some vague idea of what’s important to them but haven’t fleshed it out.

  2. Communication – for couples, this is an excellent way of bringing things out into the open and learning each other’s desires and priorities.

  3. Recognition – if there is something you really want, this helps to figure out what’s getting in the way. It might not be as much of an impediment as you thought.

  4. Balance – the process can shift a financial life that is too focused on saving for “someday” toward living more for now, in concrete ways.

  5. Permission – Sometimes, deep-seated relationships with money get in the way of enjoying things today. This exercise can help to address that.

  6. Discovery – The act of articulating your priorities using a structured process can be illuminating. After all, thinking and talking involve different parts of the brain.

Money is not the end goal in life. It is a means to an end; a way of achieving things, experiences, and the feeling of security that people value. Identifying, evaluating, and prioritizing what you want to achieve, so that your money can help you get where you want to go, is an ongoing process of re-evaluation and discovery. Reach out to your Gold Medal Waters advisor with any questions.




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