On a recent trip to Olympic National Park, my family and I toured the Quinault Rain Forest with a National Park Ranger to learn about the history, culture and surroundings of the park. We were fascinated by stories of the homestead families that came to the area in the late 1800s and were able to earn up to 150 acres of land, but with some major stipulations: they would need to clear the land, build a cabin, start a school, and have supplemental income – which for many meant joining the timber industry. With extraordinary amounts of determination and grueling manual work, these families were the very definition of the American dream. Timber remained a primary industry for future generations on the Olympic peninsula – until the northern spotted owl was declared an endangered species in 1990.
The ruling came on the heels of many years of fighting between environmentalists and the timber industry, each with understandable arguments – the former wanting to preserve the ecosystem of the old-growth forests that housed the owls, and the timber industry focusing on lost timber supply and lost jobs. A simple online search for “spotted owl controversy" will tell you all that you need to know, but the merits of the arguments on both sides are not actually what caught my attention.
The effect of the final ruling – and the subsequent limits on timber harvests - really hit home for me. After all, timber was a century-old dependable source of income on the Olympic peninsula, and now the industry that supported the financial livelihood of many families could no longer be dependably pursued. While these families likely assumed some environmental risk associated with the timber industry, did they ever think it was possible that a spotted owl could entirely change their financial picture?
I wonder how many people have spotted owls in their financial plans? That is to say, how many of us have a threat so unlikely, and yet so piercing, lurking around our financial plans? Even if you could identify your spotted owl, what would you do about it?
All financial plans are unique, each one incorporating the multilayered elements of resources, risks, opportunities, taxes, and goals of the individual, family, or business. There are of course some risks that are present in most financial plans – such as stock market risk, longevity risk, and key man risk. But a spotted owl risk would be an existential threat to your own plan - one that is potentially financially devastating in a way that is both too expensive and too unpredictable to insure against. For example, what if a breadwinner parent stops working to take care of a suddenly sick child with long term care needs? Or if a doctor’s community is destroyed by a natural disaster - with both her practice and her patients gone? Or if - as so many predict - artificial intelligence or some other technology completely wipes out your job or your industry?
This is where our theory regarding life's surprises comes into play. We can accept that life can surprise anybody with a disaster at any time. But while Day 1 of a disaster can't be prevented, Day 2 of a disaster shouldn’t be its own disaster.
The best defenses for a spotted owl risk, then, are twofold. First, figure out if you have one. Identifying the possibility of a risk before it happens provides some confidence that you can handle it if it comes to pass. The second step is to think through your Plan B - what you would do if confronted with that risk. As an example, our Park Ranger guide went on to tell us that many of those families that once relied on timber now rely on tourism for their livelihood, renting their property for events, or as VRBOs, or hosting families in B&Bs and sharing their stories of the fascinating history of the Pacific Northwest. For your spotted owl risk, ask yourself some key questions. What resources do you have to adjust to your new situation? What changes would you need to be prepared to make? How could you adjust your plan so you could still live the life you want, even in your new circumstances?
Your financial plan should help you bring your goals to life, but it should also help you prepare for the things that can trip you up along the way. We would love to hear about any spotted owl risks that you can identify in your plan. To share that with us or to talk to our team of planners, send us an e-mail at hello@bfsadvisorygroup.com.
Debra Brennan Tagg is a CERTIFIED FINANCIAL PLANNER™ Professional and the creator of the DBT360 Financial Plan, a proprietary program that helps her clients prioritize their goals, leverage their resources, and address their risks. She is the president of BFS Advisory Group and teaches the public and the financial services industry about the importance of values-based financial planning and investor education.