Thinking Inside the (Puzzle) Box


As jigsaw puzzle fans know, the question of which piece will be the last remains a mystery until the end. The same is true of financial planning.  One of the most challenging aspects of providing financial planning advice is not knowing which piece of the puzzle will be the most important: the one that completes the picture.


Will it involve finances? That often means helping clients better manage their spending by helping them develop a budget that covers current expenses and anticipates future needs. A budget which does both will almost certainly lead to a more comfortable later life, especially an easier retirement. Those who don’t have one already are sometimes surprised at what a difference being deliberate about spending can make. Of course, budgeting is a lifelong piece of the puzzle that must be updated as people move through different stages of their lives.


Perhaps it’s insurance. All homeowners should have fire insurance because the loss of a dwelling has the potential to be devastating. In addition, we believe that property & casualty coverage is also a necessity. An accident involving someone visiting could have even worse results. You might agonize personally over the outcome of a fall or dog bite but could also be wiped-out financially without insurance. Most people are well-served with significant life insurance coverage early in life. Those starting families especially need some assurance that their dreams will be fulfilled. But do they still need the same amount of life insurance as they near retirement? Sometimes, we find that people need specific coverage for jewelry or collections more than they do life insurance. As planners, helping with these pieces is another part of solving the puzzle.


Maybe someone is dealing with a life-changing event: marriage, divorce or death. While adding a partner to a single life requires multiple adjustments, beginning a committed relationship or marriage is a happy occasion. On the other hand, losing a significant other also requires adjustments but many people in that situation are so overcome by grief that they struggle to move forward. Since we have already helped scores of people take these steps, we have many resources, ie potential puzzle pieces, available. Selecting the proper ones for each individual situation is a specialty.


Many people come to us initially for investment advice. Our firm’s experience with this goes back thirty years and our aggregate individual experience easily exceeds 100. This does not mean that we can say for sure what the best investment might be – for example, we never recommended GameStop – but our strategies are time-tested. All of our investment relationships begin with a basic financial plan. This allows us to outline reasonable goals, then structure an approach designed to meet them. While we often suggest that another issue is the most urgent, investing will always be a critical piece of the puzzle.


Taxes are an interesting piece of the planning puzzle. Most everyone wants good roads and well-maintained parks but taxes are required to pay for such things. We are believers in active tax planning, meaning we try to manage all aspects of our clients lives to keep taxes as low as possible. With Congress in the habit of making last minute changes, many of them retroactive, this is always a challenge but we keep current on tax law because we want our clients to pay only their fair share.


Of course, retirement planning involves investments but generally requires attention to other details as well: living arrangements, health care continuation and more. Because we insist on a balanced budget at all stages of life, retirement may involve selling securities to raise funds, taking a part-time job or beginning to take withdrawals from retirement accounts. As financial planners, not merely investment salespeople, we assist in all of these areas. Social Security planning is something we do for most clients, as it requires gaming a wide range of potential lifespans and claiming options. Retirement is often the trigger for travel and we usually encourage clients to do it sooner, rather than later. As we say around the office: you’ll never be younger or healthier than you are today.


Estate planning is often left until too late. According to Lexus/Nexus, 55% of Americans don’t have a will, the main reason being ‘they haven’t gotten around to it’. Wills and other estate planning documents represent a series of interconnected pieces and no financial planning puzzle can be completed without them. Preparing for the unexpected is the base on which financial planning rests, so estate planning is a topic we discuss with every client.


Clever puzzle designers keep things interesting by offering pieces that appear to fit in more than one place. It’s our job to make sure that all pieces fit together correctly to complete the picture. So, which piece of the puzzle is the most important? First, second or last are the most common answers. But in financial planning, we believe it’s the box itself, the vision of the completed puzzle, which is most important. As planners, it doesn’t make sense to begin putting the pieces together without a good idea of what the completed project will look like.