Someone said that in books or blogs there may be approximately seven original ideas or themes and all else is a variation on that.
After decades with one of the Premier banking and investment firms, I offer the following as an ongoing relevant theme and a perspective that you don’t see much in brochures or hear in private banking dialogue.
Wealth planning and life planning are interdependent. We often think in linear and sequential terms. Our wealth planning firm promoted three stages of wealth planning:
Accumulation stage, Preservation stage and Distribution stage .
Accumulation stage is about determining your livelihood , making money , your spending habits , budgeting and setting money aside for a variety of needs.
Preservation stage is about keeping your assets safe , maintaining them , not exposing them to a lot of risk or loss of principal , insurances , optimizing tax planning etc.
Distribution is often about estate planning , who you want to leave your money to , distributing money to various causes with tax efficiency and ultimately where you want the things you own to go at your death.
There are strategies in each phase, products and metrics to support them and tools to assess effectiveness. Here is where this world is not flat but a round wheel with the three phases . In reality, it is not linear , especially these days. Accumulation ,preservation and distribution are spokes of a moving wheel that vary in their focus , balance and priority throughout life.
I make this distinction because viewing it in these terms might very well lead to a more fulfilling experience , making the most of your hard earned money and experiencing some joy in planning along the way. This is different than looking at them independently and sequentially , in other words , spending decades simply focusing on accumulating , without much thought as to which assets you want to preserve and ultimately distribute. I saw this a great deal where people owned their own businesses . Understandable , given the 24/7 nature of owning/running a business. There are tools and tactics in each stage which are delineated in many standard private banking and wealth management brochures. The bigger opportunity, I believe , is the optimization and understanding of the interdependencies of these three spokes all along the process .
Young and old alike , are doing all three simultaneously ; accumulating assets , building savings beginning retirement savings , making a home. Sometimes it goes out faster than it comes in. Then , you continue accumulating and preserving and allocating that savings and investing, not willing to risk that portion or start over again , and managing risk through insurance products , ie preserving .
Today , many people wish to distribute, make gifts, donations , incubate other businesses to see the benefits of that during lifetime and not after they are gone. It gives them joy , satisfaction , rewards that surpass simply seeing the bank book and net worth grow.
The concept of balancing all three is not new , but like many things the awareness and implementation are the key. A book called , “Die Broke” by Steve Pollen and Mark Levine is one roadmap with some specific ideas you may find of interest .
To look at these three stages and determine your evolving interpretation, desired weighting at the various steps and enjoy all three stages all along the journey. Even in retirement you may be able to do it as well, based on long-standing mindset and preparation.
I just read Steve Sanduski‘s , owner and consultant Belay Advisors in Wi , talking of how all things are connected and figuring out how and why is the holy grail .
Financial and life planning are inextricably linked and the sooner we realize it and practice it , the sooner we will be the beneficiaries of it , as will all those with whom we are connected !