Planning for Transition Risk: Navigating Life’s Curves

Jun 6, 2021

Managing risk is a pretty standard concept when you’re saving and investing along your financial journey. There are a lot of ways to manage investment risk, and of course, there’s insurance for business and personal risk. But there’s a big risk that gets overlooked until it hits – transition risk.

In my work with clients across all stages of their lives, I began to see a pattern that didn’t have anything to do with age, or marital status, or whether you own your own business or have a different professional career. It was that moving from one life stage to another creates uncertainty at best and in some cases, can derail a plan entirely.

The reason seems to be twofold. The catalyst for the transition, whether it’s a positive or negative event, creates uncertainty and new circumstances that must be navigated. And the individual’s reaction to the transition presents additional complications. It is much more common than you would think for otherwise very savvy people to get so unnerved by a transition that things they would normally handle with aplomb fall completely by the wayside.

Life Events Change Even the Most Comprehensive Plans

The lead up to and then the commencement of retirement; the loss of a spouse; and expanding or selling a business are common curves – or even switchbacks – most people experience. Having a plan in place for retirement, or an estate plan, or a business plan is only part of the story. The problem is that while the plan doesn’t change – you do. Transitions force us to rethink our lives, revisit old decisions, and even make the future over into something we hadn’t thought of before.

Identifying the Uncertainty: Answering the Big Questions

Let’s take a look at some inflection points and the questions and uncertainty they can create.  

Pre-Retiree

·       Do I have enough money for retirement?

·       How can I lower my taxes?

·       Do I have enough to achieve a dream like retiring early, helping my kids out, or starting a business?

 Newly Single

·       How do I create a financial plan that works for just me?

·       What are my tax obligations and liabilities?

·       How do I invest to mitigate volatility?

·       What should my estate plan include now?

·       How can I lower my taxes?

 Growing Business

·       Can a retirement plan help me monetize my business?

·       What if I want to sell? What is my business worth?

·       How do I create a succession plan?

Navigating Through the Twists and Turns

My job is to see my clients through this phase. No matter what the catalyst is, I’ve built my practice around being able to marshal the resources that are needed to smooth out the road. 

Empathy. First, last, and all the way through, I understand. I’ve seen so many situations throughout my career, first as a CPA with a big six accounting firm and now in my role as financial advisor. I know that big things get messed up, and they are almost always fixable. My first rule with clients is that we are going to focus on getting to the solution, not whatever caused the problem.

Process. Whether it’s a retirement account, rethinking a life plan for a single person who used to be part of a couple, or consulting on a business change, process is key. I start with your assets, I solve for anything that is holding up progress, I factor in tax efficiency, I build for where you want to go, and only then we move accounts and create an investment plan.

Expertise. I started as a CPA, and while I don’t do taxes anymore, I keep up with all the new regulations and changed to the tax code because taxes are such a big part of keeping my client’s wealth in their pockets. When you’re living on an income stream generated by your investments, understanding all the tax implications and exploiting everything clients are entitled to is paramount. The same with retirement plans. I maintain a high level of knowledge across the universe of plans – 401(k)s, all the IRA permutations, Roths, company plans, ERISA regulations. 

I learned my business a long time ago – and I relearn it every day. I strive to be considered in expert by my peers in the fields my clients need, from taxes to retirement planning. Customized, personal, actionable, successful advice always has a foundation of expertise.

The End Result

Navigating through a transition is just one of those life experiences that all we’d all (sometimes) rather not go through, but the goal is to handle it creatively and effectively, so you don’t have to spend time looking back – you’ll be too busy enjoying your new “now.”