Make Yourself Into A Financial Elite
By Rob Wrubel, CFP®, AIF®
OK, let’s get this out of the way. I am from New Jersey and am rooting for the Giants to beat San Francisco in this evening’s NFL playoff game.
At the start of the season, the Giant’s Super Bowl winning quarterback Eli Manning was asked if he was one of the elite quarterbacks in the NFL. His answer was, of course I am. For many reasons, his name does not jump out in the football pantheon like some other current superstars. Tom Brady. Drew Brees. Peyton Manning. Still, Manning has won a Super Bowl ring with the Giants and looks to be breaking records this year with his fourth quarter touchdown passes and come from behind victories.
There is a lot to learn from following Eli Manning’s season and career in the context of special needs planning.
Lead with your heart.
Most of the time, we cheer for the uniform. Broncos, Cowboys, Giants, Patriots. Over time, we come to cheer or jeer for our hometown quarterback no matter who it is. For me, watching Eli Manning play and take interviews with the press is a little different. His emotions are easier to read. His looks as excited or disappointed as the most ardent fan dressed in a team jersey shouting at the television set in his living room. So many other quarterbacks look too cool and composed and you do not always get the sense that they care. Eli Manning looks like he cares.
Your planning requires you to have an emotional stake in the outcomes. We need to stay excited about creating positive futures – financial, community and living – for the special needs family member in our life. The journey is a long one. There will be temptations to stray off track. There will be plenty of opportunities to take money from savings for some immediate need. There will be times when the legal work will need to be redone and there will seem like some good reason not to. There will be times when the care plan will have to be changed but it might not be easy.
The key to keeping on the right path will be your ability to access the emotions that lead you to start planning in the first place. Relief is the first emotion that comes to mind. People with strong plans feel a huge sense of relief from the moment they start. Of course, love of the special needs person and the feeling of happiness that comes from knowing they are safe, fulfilled and appreciated are other key drivers to maintain your planning over time.
You are going to have setbacks.
The season started strong and the Giants went to a 6-2 start. Then the middle part of the season came and they lost four in a row. Commentators and fans alike wondered if the Giants had a chance to make the playoffs. The Giants never seemed to doubt their abilities. They came back as the season wound down and today they play for a chance to go to the Super Bowl.
You will have setbacks in your financial planning life. We know that investment returns can look like a setback at any given time. At some point in 2011, the S&P 500 (the index that tracks the 500 largest companies in the US) was negative, close to -20%. The year ended up over 2%. It bounced back.
Based on people I speak to regularly, most of us will have some events that will set back our financial life. It is hard to fund retirement plans and special needs accounts when you have to struggle to find a new job and replace the income needed to pay the mortgage and utilities. Divorces and unexpected deaths or illnesses also have the chance to alter our expected planning outcomes.
Your attitude towards these setbacks will determine your future. Let them own you and drag you down and you are done, no longer able to compete. Face them head-on and believe that they are temporary and you can conquer the situation and continue to move forward. There are steps we recommend as part of the financial planning process can help minimize these setbacks. Build an emergency fund and other reserves. Pay down debt. Create spending policies. Diversify portfolios and rebalance investments to stay on top of your asset allocation.
Don’t give up mid-way through.
The Giants could have given up at the half-way point in the season. Nothing looked right and they kept losing. The team had some injuries. Media outlets wrote them off. They lost to some bad teams.
So often, I meet with people that have started some version of their special needs planning only to stop. They have met with an attorney but never finalized the plans. They meant to contribute to the 401(k) plan at work but never sat down with the human resources director. They moved all their money to cash when the market tanked at the end of the tech bubble and never put any of it back to work.
The best way to fight this is to automate many of the actions you need to fulfill the plan. One example is retirement savings. It works best when you do not have to write the check to the account each month and each year. We can always find some other way to spend the money rather than put it into a boring old investment account (fly fishing trips, tickets to shows, new clothes all sound better). Have it drafted from your check and go right into a retirement plan at work.
Gather a strong team.
Football is a team sport. Each play requires 11 on offense and 11 on defense. Eli Manning could not even try without having a strong team around him. We also do not see the coaches, managers, trainers and other support personnel needed to keep Eli Manning on the field and winning.
You do not need to play all of the positions yourself. I prefer to sit down with my clients and their team members in the financial and legal world – the CPA, trustee and attorney. You will have more team members to help with other parts of the process – medical professionals, Social Security, non profits and others. Decisions are usually better with the right team in place.
Join the financial elite?
The financial elite? No, I do not mean you have to be a hedge fund manager or leading banker making tens of millions of dollars a year. My definition of the financial elite is a bit different. My definition includes saving more than average to emergency funds, retirement plans and other accounts. According to a Fidelity report published last March, the average 401(k) balance is somewhere around $74,900. Where do you fall? I recommend reducing debt to strengthen your balance sheet. How strong is your balance sheet? Did you create more net-worth over the last few years for your family or not? Will you have enough assets to be able to maintain your lifestyle and provide for your special needs family member?
Families with special needs must be better than average. We have a second generation to think about and care for with our actions today. We have a higher need to create assets as expected government benefits continue to be in jeopardy. We should not settle for less than seeking to create the best future for ourselves and our special needs family member.
Eli Manning told the world he belonged to the quarterback elite. He did not settle for anything less. Last night, the Giants won their game and earned another trip to the Super Bowl. Eli Manning continues to set records for both his team and the NFL.
Join the financial elite. Do not settle for less than you can do and are capable of doing. Your time, energy and dedication will make a significant difference for your special needs loved one.
Rob Wrubel, CFP,® AIF® is a Senior Investment Consultant with Cascade Investment Group, member FINRA & SIPC. Cascade Investment Group is not a tax or legal advisor. You should always consult with your tax advisor or attorney before taking any actions that may have tax consequences.