In the U.S. some 95 percent of women will be their family’s primary financial decision maker at some point in their lives.¹We created this report, “The 7 Financial Planning Questions Women Must Answer Correctly Before Getting Serious About Retirement Planning and Investing,” with one desire: to help you feel more confident about your future.
Because of their proven academic, career, and personal prowess, women have become a financial superpower.
Yet few women feel financially secure. According to an Allianz Life Insurance Company survey, 90 percent of women felt “somewhat” or “not at all” financially secure.²
Also, we see that in 2011 there were 15.7 million divorced women in the U.S.3 In the same year there were
11.9 million widows.4
You as an individual have your own worries, wants, and interests. What are your most troubling concerns and doubts and what are your dreams? We realize that you have questions and will be seeking information and clarification. Perhaps, you wonder whether you will be able to maintain your lifestyle in retirement.
Possibly, you have just experienced a loss in your life and are concerned that you will have to do all the finances yourself. Or maybe you aren’t sure about how to protect your investments.
We created this report, “The 7 Financial Planning Questions Women Must Answer Correctly Before Getting Serious About Retirement Planning and Investing,” with one desire: to help ease your financial concerns and shrink uncertainty. We want to help you feel more confident about your future.
Let’s, first, look at “7 Questions.” If not answered, these potential pitfalls can bankrupt your future.
Women who are not well informed about their finances and investments face a steep learning curve if they are unexpectedly widowed, divorced, or lose their job. It is better to have a plan now.
The 7 Financial Planning Questions Women Must Answer Correctly Before Getting Serious About Retirement Planning and Investing
1. Have you clarified your financial and investing goals?
Some women and couples will be able to achieve all that is important to them and live out their later years in style. Many will not.
Having a clear understanding of your objectives, priorities, and goals for retirement will help to clarify choices about doing the best with what you’ve got for greater control over your financial future.
You may want to buy a vacation home or ranch, go on a dream vacation, go back to school, or spend most of your time with your grandkids.
Also, it helps to understand both the estimated needs and the resources available to meet those needs, as well as whether your ideal lifestyle is feasible, or not.
Simply, a solid financial plan starts NOT with your means or assets or liabilities, but with your goals and values.
We need to know what is most important to you in your life – in retirement and over the long-term. Then, your financial plan and investment strategy can be built to help you reach your goals and express your true values.
2. Have you planned to take care of family, education expenses, or important causes?
Through our simple financial planning process we uncover and help prioritize both your needs and wants. Needs are your required expenses such as housing, healthcare, children’s activities, insurance premiums, fuel and auto expenses, and food.
Wants are expenses that are non-essential, but contribute to your ideal life. These items can include a vacation home, travel, and funding important causes or education for future generations.
This simple process helps create a strategy designed to pay for your needs and wants through retirement with a combination of income streams and income from assets. This will help you take care of family, education expenses, or charities that are important to you.
3. Are you addressing the common life and retirement risks?
What do statistics say about Americans? Yes, Americans are living longer than ever before.
That means you need to plan for
a long life, and potentially a long retirement and likely deal with all the challenges of aging.
At the most personal level, it’s about your health and quality of life. It’s also all about your purchasing power and the damaging impact of inflation on that ability to support your needs and quality of care.
“Inflation,” according to Crossing Wall Street‘s Eddy Elfenbein, “is a tax on capital and it slowly eats away at your portfolio. Even a low rate of inflation—say, 3 percent per year—compounds to 50 percent in less than 14 years.”
Thus, inflation causes a gradual decrease in your power because a fixed amount of assets buys less.
China is now the biggest car market in the world.5 In 2009 for the first time auto sales in China surged past the United States. This statistic means more than bragging rights. It indicates the pressures that China and the other growing countries worldwide will put on key resources such as water, food, oil, and steel, and the lists go on.
The budget deficit along with escalating demand for resources both from a growing world population and from developing countries will have an impact. That’s why fixed investments such as cash, treasury bonds, and fixed annuities may not keep up in an inflationary environment.
It comes down to this: Inflation must be taken into account in financial planning.
4. Do you have an investment strategy?
Study after study shows that the average investor cannot beat the market.
You may ha
ve heard that “fear and greed” drive the markets.
Those investing on emotion risk being fearful at the wrong time and selling at the bottom, or being greedy at the wrong time and buying at the top. See below for a graphical representation of the Cycle of Investor Emotions.
As a result of this “fear and greed” cycle, many investors do far worse than the average market return.
Research backs this up. On average, investors without a disciplined process will significantly under-perform the stock market. Consider the chart below from independent research firm Dalbar. Over the twenty (20) year period ending December 31, 2010, the S&P 500 Index achieved a 9.14% annualized return, while the Average Equity Fund Investor received a return of only 3.83%. This is known as the “behavior gap.” For the stated time period this is an “emotional penalty” of 5.31%.
This chart shows that, especially with today’s volatile markets, investors working off of emotion rather than from discipline can be their own worst enemy.
Most individuals don’t want to spend the time, nor do they have an interest or the experience, to create and follow a disciplined investment system that is going to give them a reasonable chance of accomplishing their most important goals. Without having and following a disciplined plan, investors jump in and out of the market at the wrong time damaging returns and jeopardizing their retirement goals.
The management of downside risk is critical in today’s volatile markets and should also be a key philosophy deployed on your behalf.
Finally, we recommend your investment strategy be guided by an Investment Policy Statement. Our clients take advantage of institutional funds through DFA which are designed to:
- Tailor your asset allocation to best meet your goals while reflecting your tolerance for risk,
- Minimize taxable income and realized gains when in taxable accounts,
- Minimize the internal expenses of investments and total cost of your strategy,
- Diversify portfolios to avoid the concentrated risk of betting on any one industry, company, or geography, as well as maintaining the proper diversification through selective re-balancing, and
- Use historical models to weight investments to perform the best over time through a disciplined, long- term investment approach.
While no one can guarantee future performance, we believe an investment strategy that is:
- in our mind proven over decades,
- then tailored to your goals, and
- patiently executed
will maximize your chances of reaching your investment goals.
5. Do you have a plan for healthcare?
Health care expenses can rise with longer life, which is a big concern when planning for retirement.
You may have seen the recent headline where a 65-year-old couple retiring in 2014 will need approximately
$220,000 to cover medical expenses in retirement even with Medicare insurance coverage, according to Fidelity’s recent health care cost estimate.6
Many women are worried about the cost of their own healthcare drawing down their savings in retirement.
Some women are concerned that the medical care costs of their husband or partner may use most of their savings for medical care and support at the end of their life.
6. Have you chosen a financial advisor or are you thinking about doing financial planning and investing yourself?
News of greed and misdeeds in the financial services field has caused investors to be skeptical. They may suspect a conflict of interest everywhere. Trust takes time to build and it is easy to break. Whether you are evaluating financial advice or seeking an advisor to collaborate with you in developing your own financial plan, look for:
An Independent Voice – one that provides objective and unbiased advice. It is unlikely that you will find this advice from an “advisor” pushing a particular product or service.
What types of relevant experience back up the advisor’s statements? Do they seem informed or ill- informed? The right type of experience can indicate competence. As a team, we have helped create countless financial plans for clients and assisted in their implementation.
A Fiduciary Standard – This means that the advisor acts always in the best interest of their clients – they have an obligation to act in a way that best meets each client’s needs. Most large financial services firms offer investments which are deemed “suitable for you” yet they may not always be in your best interest.
No Mystery about Fees – A study by the University of Pennsylvania’s Wharton School and State Street Global Advisors focuses on improving client relationships. This study makes the connection between coming across as trustworthy and being direct and explicit in your discussion of fees. Is there a full disclosure of costs?
Keeps Commitments to Clients and Prospects – Trustworthiness can be found in the individual or firm that cares enough to show concern for clients by keeping all commitments.
Women need to find their own trusted advisor who works in their best interests – one they feel comfortable with – or decide to master the important nuances of financial planning and investment on their own.
7. Do you have a financial plan?
Most women we meet go through the accumulation phase of life without a defined strategy to fund both their annual expenses and their long-term needs. They have not charted a basic financial course that will balance their life today with saving and investing for the future.
Performing a basic projection far ahead of your expected retirement date is ideal. The numbers may reveal that you can fund everything you want today and your retirement as well. Or, perhaps, they will show that you can make simple choices today that will help you avoid running out of money during retirement. This analysis may put your mind at ease.
Avoiding the serious missteps can help to provide a better chance for a long-term financial future and eventual retirement that meet your desires. But more needs to be done. And most people we meet don’t have the time or desire to understand and put together all the pieces of the puzzle of creating and managing a complex financial and investment plan.
In addition, a major benefit of working on an ongoing basis with a financial planner is they will help you keep the plan up-to-date so that your investment strategy stays in sync with your financial situation, and financial issues are addressed as they arise.
For example, our clients have access to an online portal so they have an up-to-the-minute snapshot of where they stand, and we can quickly make any adjustments to your plan or investments if your situation changes.
Why Do You Need a Financial Plan?
First, let’s answer the question, “Why do you need a financial plan?”
Financial planning takes the uncertainty out of financial decisions and helps you discover the tradeoffs inherent in all options so you can get the most from your financial resources and, hopefully, your life.
Everyone has unique objectives and circumstances, and those will change over time, so it’s critical to have your own financial game plan, one that provides direction today and can guide you in the future.
The average woman faces an uncertain economy and more options for saving and investing than ever before. It’s easy to feel overwhelmed or confused, unless you find a way to understand the big picture. A financial plan can bring clarity to all your finances and help you develop a strategy. It becomes easier to make financial decisions, set long- and short-term life goals, and stay on track. Working with a financial plan can secure your financial well-being and give you peace of mind.
Some women choose to create their own financial plan, but you may consider a financial planning professional if you:
- Want more control over your finances, but aren’t sure where to start,
- Don’t have the expertise or time to do your own financial strategy,
- Want a professional, objective opinion about the plan you are considering,
- Don’t have a grasp of a specific area such as investments, insurance, taxes or retirement planning, or experience a financial windfall, health challenge, unexpected event in life, or are newly in charge of wealth.
Financial planners offer varied services and can have different levels of expertise, experience, and credentials. They can also have different styles and philosophies. Some planners work as a part of a cohesive team of advisors, and others work as solo practitioners.
Your own financial planner should be a trusted advisor who understands your needs, sits on the same side of the table as you do, and works in your best interests.
A System for Financial and Retirement Planning for Women and their Families
“If you fail to plan, you are planning to fail!”
— Benjamin Franklin
How do we help to see that your money lasts through your lifetime while, if possible, leaving a legacy for your heirs? Simply, we follow a collaborative process to provide custom solutions for each woman and her family. Also, the process helps you avoid mistakes that would be tough to recover from.
1. Understand Key Goals and Risks through Discovery
“A successful wealth management plan begins with your values, goals, and your vision for the future. Your financial plan becomes our personal compass to guide you toward financial independence.”
— Rick Epple
The start of the journey begins with you – your overall financial and retirement goals, what you value most, how you like to spend your time, what you want for your family, how you see your legacy, and where you are today with your assets and investments.
With our Discovery process we leverage the power of questions. For example, we’ll ask you:
1. What’s important about money to you?
2. How confident are you that you’ll have enough money to last the rest of your life?
3. Where are you now with your investments and resources? What is the context behind them?
4. Do you know what investments you own and why?
5. What are their most important financial planning goals that will require planning and money to achieve?
In this step we also begin to get an understanding on the “facts and figures” relative to your financial situation. Preserving and harvesting wealth and making the most of your investments and resources requires comprehensive diagnosis of the current situation.
2. Create the Financial Plan
“We are in the business of creating and managing a custom financial plan for each client – one that can vary year-to-year with changes in a client’s job or life. A “process” along with ongoing wealth management is imperative to client’s financial well-being.”
— Rick Epple
Planning for retirement involves many issues, some that need to be addressed immediately as well as moving pieces that need to be considered and most often addressed annually.
There are no rhetorical questions in financial planning. Here are the key questions Aurochs Financial Group helps our clients to answer:
1. What might retirement look like?
2. Do I have enough money to last the rest of my life?
3. Are my assets positioned to create the income I will need in retirement? How can I create that income while not relying solely on CDs and Money Market Funds?
4. If I have the basics covered, can I contribute to my family and important causes, or spend on extras?
5. What do I want to happen with my money after I’m gone?
6. Have I taken advantage of all the planning opportunities available to me? The planning process is the key to getting answers you can feel confident about.
3. A Custom Wealth Management Strategy in Accordance with the Plan
“The essence of investment management is the management of RISKS, not the management of RETURNS. Well managed portfolios start with this precept.”
— Benjamin Graham
A key component of your financial success is managing your investments in the context of your goals and your tolerance for risk. This important step, which many fail to take, requires a detailed understanding of your current, comprehensive financial plan.
Our disciplined approach removes emotion from investment decisions at a time in our world when emotions are running high. We place our process above opinion and attitude and regularly make decisions to dynamically manage risk within your portfolio.
While no system or financial planning strategy can guarantee future results, we have developed a disciplined Investment process designed to:
1. Position for growth while dynamically mitigating market risk to help you save and invest FOR retirement and
2. Help to preserve wealth and create income IN retirement.
Growth Potential for Those Saving and Investing for Retirement
For those accumulating wealth and investing for retirement, we create a custom portfolio according to both your goals and the trends in the market. Our objective is to take advantage of market movements by staying invested and designing an efficient, diversified portfolio which both preserves your assets and helps fuel growth.
Key benefits of this strategy include helping you:
- Create and proactively manage an investment portfolio based on your goals for retirement,
- Benefit from transparency, liquidity, and low cost as appropriate criteria for choosing components of your portfolio, and
- Capitalize on the power of markets for growth with a disciplined, risk balancing process.
We believe it takes a specific planning expertise, process, and trusted advisor/client relationship to help fund your lifestyle and the unknowns of retirement from the assets you have spent a lifetime accumulating.
Wealth Preservation and Income to Fund Your Lifestyle in Retirement
For those in retirement, we structure your nest egg to help create the long-term growth potential you will need for the future and to fight the eroding power of inflation. We also set up the short-term income streams you need to fund your lifestyle.
Key benefits of this strategy include helping you:
- Transition into retirement and manage your portfolio through the retirement years,
- Balance the need between short-term cash flow and long-term preservation and growth, and
- Develop a long term income stream that is tax efficient and unique to your circumstances.
As you will see in Step 5, your financial and investment plans are not “set once and forgotten.”
4. Address Other Wealth Planning Needs and Individual Risks
The best financial advisors try to accomplish goals with the fewest moving parts at the lowest costs.
— Aurochs Financial Group Success Principle
As we manage YOUR plan, we also coordinate your team of specialists as needed, including tax, insurance, estate, and legal team members.
The outcome: You gain the advantage of having a team of experienced professionals at your disposal while avoiding the headaches of spending time trying to manage the process.
Risk management is key – creating the right holistic strategy for your situation, reviewing the types of insurance you have currently, and making changes to fit your goals and needs – are all key factors. Considerations include life, health and disability, and long term care insurance.
5. Engage in Ongoing Monitoring and Management of the Plan
Having a plan for “down markets” is important in retirement.
Don’t get caught off guard.
— Aurochs Financial Group Success Principle
As part of the planning process, we are available to directly assist you with implementing the strategies that have been agreed upon. In addition, we work closely with you and your other advisors because we believe (as the Japanese proverb tells us), “None of us is as smart as all of us.”
We review your plan with you formally at least annually, and we communicate with you regularly.
Monitoring your plan on an ongoing basis is vital. These updates enable us to collaborate with you to adjust for changes, for example, in your personal circumstances, the overall economic conditions, the markets, and tax laws.
We are by the side of our clients not only as they approach and transition into retirement, but also if they experience health issues or when they simply glide through the aging process and want to make sure their expenses and family are taken care of.
Surviving in Today’s Chaotic World and Strengthening Your Financial Future with Your Own Financial Plan and Certified Financial Planner®
Many women and their families put off financial or retirement planning longer than they should. And for those who do plan, often they let their plan fall out of date.
A well thought out plan can address your lifetime financial and insurance needs. You will be able to feel more confident about your future — through good and bad markets — knowing you can rely on a solid plan.
So here’s what you should do now.
To help you understand how we might partner with you and help organize your life, finances, and retirement, our financial planning professionals at Aurochs Financial Group, a State Registered Investment Advisor, offer a no- obligation, complimentary Discovery meeting. In this meeting we’ll focus on understanding your financial values, your goals, and your current situation with an eye to where you hope to be. We’ll also explain our financial planning roadmap and give you a chance to ask lots of questions.
The meetings are generally scheduled for an hour, but we don’t put a time constraint on them and will take as much time as needed to fully answer your questions.
Schedule a Discovery meeting today to see if a CFP® and the Aurochs Financial planning process is right for you.
Call 952-470-5049 or email us at firstname.lastname@example.org and schedule a time for your meeting. The 60 minutes you spend with us could be a wonderful investment in your future.
About Aurochs Financial Group
We at Aurochs Financial Group work in our client’s best interests to understand their unique issues. The outcome is a flexible but clear and direct road map to achieving their financial goals. This consists of a comprehensive and integrated wealth management plan along with corresponding unbiased custom solutions. Our plans will continue to guide and protect clients in the years ahead, regardless of changing market and economic conditions.
Our Core Values
Aurochs Financial Group practices truly comprehensive financial planning when we will carefully examine your entire financial situation and identify strategies for you to successfully achieve all of life’s milestones.
As a fiduciary, the Aurochs Financial Group advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.
Aurochs Financial Group is centered on our clients and on their personal financial situations. As fee-only financial advisors, we are committed to carefully recommending a prudent course of action that is strictly in the best interests of the client.
The focus of Aurochs Financial Group is to provide you with the very best advice available. We are not tied in any way to a firm or service. Our independence allows us to make recommendations based on your unique needs.
This model minimizes conflicts of interest. As a fee-only financial advisor, Aurochs Financial Group only charges for our advice and/or ongoing management. No other financial reward is provided by any other institution, which means we do not receive commissions on the actions we take on your behalf. Compensation is based on fees paid directly by our clients. In essence, Aurochs Financial Group sells only one thing – our knowledge.
To become a NAPFA Registered Financial Adviser, we were required to undergo a thorough review of our credentials, experience, and knowledge to ensure we have achieved the highest level of financial planning competency available in the industry.
To provide our clients with Peace of Mind regarding their finances by balancing today with tomorrow.
We accomplish this by utilizing our process to ensure nothing regarding your finances is overlooked. This is done by helping you chart a course and then assisting with implementation and quarterly monitoring of your personalized plan.
Are you ready to create a plan for living the life you’ve always dreamed about? Contact us today to schedule your complimentary discovery meeting.
Your Guide to Financial Independence
Rick Epple, CFP(r)
1 Prudential Research Study, “Financial Experience & Behaviors Among Women,” 2010-2011.
2 “Women & Money and Power,” Allianz Life Insurance Company of North America, 2010.
3 2011 American Community Survey.
4 2011 American Community Survey.
5 Federal Reserve Statistics.