One of the most significant benefits of being a financial adviser is the experience of getting to know so many families, watching how people make decisions, and learning what they have learned about the choices they made. We also consider our office a real-life laboratory, as we gather best practices and cautionary tales among clients moving through life events and stages. As we reflect this week on the year and set our sights on the goals we want to achieve in 2023, we thought we would share a few lessons and observations from 2022:
Most people feel like they should know more about money. Yet many smart, successful people don’t feel confident making financial decisions. We get it – and we get you. It’s why we exist. Nearly every new client comes to us confessing that they just don’t know how to make all of the financial decisions required for themselves, their family, and their businesses. And with the decision fatigue that so many people feel these days, we know how important it is to have smart people in your corner.
What we grew up with may no longer be true, and “a million dollars should be enough” is not a financial plan. I was born smack dab in the middle of the Gen X generation, and some of the norms and rules of thumb I grew up with no longer apply today. Women are increasingly involved in, and leading household financial plans, $1 million doesn’t buy as much as it used to. You can’t use back-of-the-napkin financial planning to plan for retirement or “what if” scenarios. Inflation is real, people are living longer in retirement, and we should all know by now that life will not always go according to plan.
Buy and hold? How about buy and pivot. The Fed’s aggressive interest rate hikes this year have caused mayhem in many parts of the financial markets. While the shock of the rate hikes may be behind us, and inflation is starting to subside, we are in a dramatically different environment than we were a year ago. It’s widely known that mortgage rates and grocery bills are higher, but when the landscape changes this much, it’s time to reassess both your financial plan and investment portfolio. It’s important for investors to stay invested even through times of volatility, but where your funds are invested may need a review.
Thanks to our clients for welcoming us into your life and sharing your unique experiences with us. We will continue our work in 2023 to help you assess your financial plan in light of our new environment.
For our readers who are pondering whether 2023 is the year to get serious about your financial plan, check out our explanation of financial planning here. If it’s time to get active with your financial plan, you can contact us here.