Broker Check

Planning in New Year

December 11, 2020


As 2020 draws to a close, its lessons will remain with us for some time. Below, we look at some of the most important financial lessons learned this year, and actions you can take to strengthen and optimize your planning in the year ahead.

1. Change is inevitable

If we learned nothing else this year, it’s that circumstances can change quickly, creating imbalance in our lives and our finances. While a plan won’t prevent shifting circumstances, having a plan in place can help ensure you’re in a better position to weather change. In fact, a key benefit of the planning process is the ability to stress test your strategy for extreme circumstances and events, like we saw earlier this year, when the S&P 500 lost 34% in value over a period of weeks in February and March, before rebounding to new highs.1

2. Everyone needs a safety net

If you tapped into emergency savings due to a reduction in household income or change in job status, think about how you will rebuild those savings going forward. Start by making savings a line item in your monthly budget. If your spending patterns have changed and your spending less money on expenses like commuting, dining out, childcare, or travel, consider redirecting those savings to your emergency fund.

3. Investment risk needs to be managed

Over time, market swings can throw your portfolio asset allocation out of balance with your risk target and investment goals. When this happens, you can rebalance by moving money from investments that take up a greater portion of your portfolio than desired, into those that could use a boost, to get back to your target allocation. Keep in mind, this also requires a strategy for dealing with the tax liability associated with harvesting losses, as you sell certain securities and purchase others. That can be complex, so be sure to consult our office or a tax professional.

4. Staying on track requires discipline

Having a disciplined and repeatable investment process in place can be especially important during periods of change and uncertainty when managing your investments requires even more time and experience. That’s where professional asset management can really make a difference. A professional approach to investment management encompasses a range of considerations from your goals, risk tolerance, and timeframe, to managing your investment tax burden. Best of all, it helps to eliminate behaviors—such as chasing returns or emotional decision-making—that can derail your strategy and make it harder to accomplish your goals within your desired timeframe.

5. The right legal documents are essential

The global pandemic got a lot of people thinking about who would take care of them or make important financial and healthcare decisions on their behalf if they became incapacitated. While a pandemic is an extraordinary occurrence, it’s important to remember that an accident, illness or other unexpected event can happen at any time. That’s why it’s critical to have a plan in place to protect your interests and the people who depend on you. If you haven’t recently reviewed or updated your will, powers of attorney, healthcare directives and other critical documents, plan to do so soon. If you have minor children, it’s critical to name a guardian. Otherwise, a court will appoint one for you.

Confidence comes from knowing you have the right legal documents in place and have appointed people you trust to manage your affairs, if you’re unable to do so yourself. And don’t forget about beneficiary designations. Review the beneficiaries you have named on your retirement accounts and life insurance policies, at least annually, to ensure they’re current.

For more information on strategies to optimize your planning in the year ahead, contact the office to schedule time so we can talk about your needs.


For discussion purposes only and in no way represents legal or tax advice. For advice regarding your specific circumstances, the services of an appropriate legal or tax advisor should be sought.