Getting Organized and Prepared through Goals Based Planning

By Justin Bacon on September 7, 2022

Part of preparing better is thinking through your long-term goals. Federal economists estimate that over 2.6 million Americans above normalized expectations retired during the pandemic (per Bloomberg L.P.). Family health issues and many other reasons contributed to this, but deeper analysis suggest that the Wealth Effect was a large factor. The Wealth Effect is a well-documented force that says when people are wealthier, they prefer to work less. Asset prices were at historically high levels during 2020 and 2021, which lead to historically high increases in the average net worth of U.S households. Unfortunately, the Wealth Effect works both ways. After one of the worst starts to both the stock and bond markets to begin a year, anxiety levels of those recent retirees could be rising. We are here to help. At VWG Wealth Management we understand the transition into retirement is often a challenging time for new retirees. For decades the individual has received a steady paycheck and has been an accumulator of assets, building the proverbial nest egg. The sudden loss of a regular paycheck, with simultaneous withdrawals from that nest-egg, is often a stressful time for the newly retired. The stress can be exasperated by periods of market volatility, as we are currently experiencing, and by the uncertainty of future events. To help mitigate this potential stress, VWG Wealth Management uses a Goals-Based Wealth Management approach to help facilitate the transition from the asset accumulation phase to the asset distribution while more closely aligning to the priorities in your life. The Goals Based Wealth Management approach begins with a detailed financial plan based on our clients’ personal goals. We then quantify those goals, and group them into several categories including lifestyle, discretionary, family, and philanthropic. Once we fully understand our client’s goals, we are better able to create multiple custom portfolios matching specific assets, investment strategies, time horizons and risk preferences to meet those future needs and aspirations. For example, we might set up a Short-term Lifestyle portfolio to be used for any expenses needed over the next five years. The investments in that portfolio will be stable and highly liquid, dampened to market volatility. As those assets are used for living needs, we would periodically replenish, ensuring there are always four to five years’ worth of living expenses readily available. The first step to a Goals Based Wealth Management approach is to prioritize individual life goals. Some questions to consider include: What are your current and future core lifestyle needs? Do you have any large purchases planned? Would you like to pass assets along to your family? Do you have a philanthropic interest? Are there any other important financial issues you face? Goals Based Wealth Management also provides a more relevant way to measure performance than traditional industry benchmarks. We measure performance based on how well you are progressing towards the goals that are most meaningful to you. The transparency of this process allows investors to feel more confident in answering other meaningful questions: What is needed to achieve my lifetime goals? Can I expand and elaborate upon these goals? As an example, upon reviewing their goals based financial plan, a client recently realized they have plenty of assets to leave to their children and grandchildren. Based on this knowledge, the client decided to start using some of those assets now. They accelerated their gifts to their grandchildren’s college savings accounts and planned some special family vacations that would create lasting memories. What is the expected future size of my estate after meeting lifestyle goals? Should I consider planning and wealth transfer strategies to reduce estate taxes? The global pandemic has reinforced that our lives, and therefore our goals, can quickly change. By preparing with a Goals Based Wealth Management approach, we can create a custom-tailored investment strategy designed to help you achieve what is most important. It should be better able to adapt to life’s changes, providing a greater perspective regardless of the ebbs and flows of financial markets.

Disclosures:
VWG Wealth Management is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment advisor. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. VWG Wealth Management and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.

VWG Wealth Management is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. VWG Wealth Management and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.

Getting Organized and Prepared through Goals Based Planning

By Justin Bacon on September 7, 2022

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