LifeLegacy Update - NOV 22, 2021

Wow, approaching the end of November, time truly does seem to fly! In the past couple of years, the pace sure seems to have quickened. Whether it is a result of me getting older, or the impact of the COVID crisis, it seems like 2020 and 2021 have slipped by.

In the course of my work, not only do I get the pleasure of serving clients and getting to know their families, but I also have the privilege of having access to some of great resources through ongoing training. Some might consider the continuing education and professional development requirements that come along with being a professional in the finance industry as a burden, or a necessary evil. I find that listening to and participating in great discussions is both enlightening and encouraging.

One benefit of the “work-from-home” mandates has been the increase in the access to remote learning and the quality of presentations. A few highlights for me in the past year have been participating in farm succession discussions, listening to leading money managers and economists, and the most beneficial is having participated in sessions focused on mental health and wellness.

One comment from Dr. Jody Harrington, a child psychologist and author from Olds, Ab that struck me was that the Covid Pandemic and resulting health measures has created a stress response from everyone, and it has not subsided. Check out her Facebook posts, she has great messages.

A stress response is usually a good thing, it leads to the flight or fight response and by its very nature is a measure of self-protection. However, the stress response typically subsides when the threat does. If it endures it can lead to serious issues. As a society we have been in a stress response since the spring of 2020. How we interact with each other, the conversations we have, how we try to decompress and the information and entertainment we consume have all been extremely impacted by this worldwide stress response.

One result of a stress response is an increase in awareness of our surroundings, this affects the “lens” we view the world through. In a stressful situation, it is a normal response to be apprehensive, doubtful, and skeptical. For most of us under normal conditions, we let a lot of “concerns” pass us by. When we have a heightened awareness because of stress, these concerns seem to be lit up with a spotlight. The “concerns” may have always been there, but under stress they seem both imminent and impactful.

In the past 2 years we have had some real concerns thrust upon us:

  • Concerns about our health and that of others

  • Concerns about our jobs and the economy

  • Concerns about the environment (forest fires, droughts, and floods)

  • Concerns about local and federal elections

  • Concerns about inflation in housing, groceries, gasoline etc.

  • Concerns about our children’s education

  • Concerns about our health system and its adequacy

  • Concerns about how businesses can rebound from the impact of the pandemic

  • Concerns about governmental responses and the impact to our lives

  • Concerns about government spending and future taxation

  • Concerns about technology and pharmaceuticals

  • Concerns about currency, precious metals, cryptocurrencies

  • Concerns about climate change policies and the impact to our lives and economy

There seems to be no limit to the number of concerns out there. The question remains in how to deal with them. When under stress, each of these concerns seem to be both urgent and important. If we had the ability to step back or to view from a distance above the fray, would the concerns be as concerning? as imminent? as impactful?

We cannot diminish the validity of these concerns, but to get through this, we all need tools to deal with the stress response. One such tool can be seen in the Serenity Prayer:

“God, grant me the serenity to accept the things I cannot change,

courage to change the things I can,

and wisdom to know the difference”

In the context of financial planning and investment allocation we are fortunate to have tools to help focus on the items we can control. In discussions with Scott Guitard, SVP and Portfolio Manager with Fiduciary Trust, he comments on the fact that the asset allocation committee does not exclude any potential outcomes, but that they assign probabilities to each outcome. These probabilities help them to make informed decisions on things like asset allocation and the use of alternative investments such as precious metals, cryptocurrencies etc. They have many tools at their disposal, all of which are directed at providing the best investment outcome for their clients based on their specific situation, goals and tolerance for risk.

As we develop projections of potential outcomes in your financial plan we use assumptions based on historical information such as interest rates, variability of investment returns, and inflation, as well as life expectancy. In efforts to minimize the impact of changes to any of these variables we use complex calculations to randomize the variables and demonstrate many potential outcomes.

The part of the plan that is within most client’s control are their incomes, spending and savings. As planners we are responsible for providing advice on how to minimize the impact of inflation, interest costs and taxation and to help you to understand the level of risk that is taken in a portfolio. We also help you to understand the potential financial impact of death, a disability or illness, and how to share the risk of loss with insurance companies.

Ultimately planning comes down to understanding your current financial reality and your desired lifestyle and legacy. There are strategies and tools that can help to mitigate the impact of many concerns. It is all about having our focus on what is within our control.

As we enter the final months of 2021, we will be reaching out to schedule year-end reviews for both your portfolios and your financial plans. There are still some items that have a Dec 31 deadline, and we will be discussing those with you as necessary.

We are now settled in our new office and look forward to showing it to you and connecting soon.