Financial success requires more than just a combination of financial products. It requires a comprehensive strategy and plan that helps you understand what financial products and methodologies are going to help you be successful.
This plan should identify problems, help you understand those problems, and reveal why and where changes need to be made. It should help you gain by reducing taxes and reducing risk. It should have lower fees and costs. It should give you more benefits and more protection. Ideally, it should save more money, increase your retirement income, and increase the inheritance to your family. If you’re not getting those benefits from a financial strategy, why bother having one?
This is the approach we take with clients, which helps them understand their wealth curve, from the present situation to future expectations and everything in between, the Wealth Curve approach helps you truly understand the truth about your situation and how to achieve your financial goals. There are three main steps in creating and executing a wealth curve plan:
- Understand Your Financial Landscape with the Wealth Curve Blueprint – The Wealth Curve Blueprint provides clients with a realistic view of where they are in order to help them understand how they were going to be impacted by the decisions they are making about their wealth. The Wealth Curve Blueprint I designed to be a snapshot of your present plan—where you are right now. With the blueprint, all financial decisions made over the last twenty-five years or more come together in one place to provide a macro view of your current situation. However, it is not designed to be a road map for where you’re going or a history of where you’ve been. It is a current, at-a-glance view of the most important parts of your plan: family makeup, income sources, savings rate, taxes, mortgages and debts, property taxes, insurance payments, lifestyle, and more.
The blueprint is one of the most important components of a financial plan because it reveals all the components unique to your circumstances and financial pressures. It uses data collected during the conversation to reveal whether your Wealth Curve is trending up or down. It shows whether your financial pressure is too high, there’s too much volatility, you’re overspending or undersaving, you don’t have enough protection against a lawsuit or disability—all the components that can impact your plan. It is designed to help you understand, identify, and rank, in the order of potential risk, the forces attacking your wealth.
- Determine if You’re on Track with The Wealth Curve Scorecard – The Wealth Curve Scorecard looks at formulas to determine whether you are on track with your financial goals. It’s based on approximately twenty performance indicators ranging from debt liability and college savings to future liabilities and lifestyle scale. It allows you to see quickly whether you are in good (green) or bad (red) standing with the current situation. This is important in understanding what steps need to be taken now and into the future.
However, it’s important to remember, plans based purely on assumptions will be wrong. Unfortunately, those are the kinds of plans so many people have. Even with the wealth curve blueprint, certain assumptions are made. Your income will continue to increase every year by a certain percentage rate, you’re going to keep saving at a healthy rate, your employer is going to put in a contribution, taxes and fees are going to stay static, etc., etc. You can even assume certain rates of return and that you’re going to be able to keep working. But again, those are assumptions. The only guarantee is that everything I just listed will change. Which is why your plan will need to continually change as well to be as accurate as possible.
- Put Your Plan to the Test with The Wealth Curve Simulation – Once you have a blueprint and your Wealth Curve Scorecard has been reviewed, it’s time to apply stress test factors that are crucial to the success of your plan. Certain assumptions can be created to see whether your plan can withstand those pressures and hypotheticals.
With the Wealth Curve Simulation, we create different scenarios such as what will happen if: interest rates drop, there’s market volatility, you become disabled, there’s a long-term care event, you get sued, or your pension doesn’t pay off as planned. By creating different scenarios, we can see whether, for instance, a 31 percent savings rate that seems adequate really is. When we annually apply simulations, we can see what changed and what to do about it to keep your plan from deteriorating. By using the simulator, we can apply all the pressures and see whether it’s all adding up to a successful retirement in the future.
Too many financial advisors connect themselves to a product, and that product becomes the solution to all their client’s problems. That is fundamentally wrong. Advisors must be macro-minded. They must bring multiple disciplines to the table to be able to source the things that are most important to you as a client and individual. You need a macro advisor at the helm so you can focus on earning your wealth. That’s what these Wealth Curve processes provide – a financial strategy that helps clients achieve financial freedom by focusing on the dynamic details of your life, not a one-size-fits-all solution. Start your process today by taking my Wealth Curve assessment, here.