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With Americans living longer than ever before, we have the opportunity to be successful in our original career, and then embark on a new venture. For some of us that means scaling back to part-time work or retiring from the professional scene completely. For others, it means starting up a new business, or exploring a new field.
Whatever Act 2 looks like for you, building financial stability now is a key ingredient in having flexibility later.
Two ingredients that foster financial stability are an essential part of the financial planning process: Clarity and simplicity.
Integration trumps consolidation every time!
A Certified Financial Planner professional can help you integrate your investment holdings and coordinate your financial life. Having clarity about your financial situation yields confidence and peace of mind.
Some clients may incorrectly associate the number of accounts they have with diversification; the number of relationships they have with financial advisors does not mean they are diversified. Yes, it’s important to consolidate, but it’s more important to integrate your financial life.
You should consolidate so that you don’t have multiple relationships to manage. But the real reason to consolidate is to integrate the pieces of your financial life.
It’s not that consolidation is bad—of course we need to automate to save time and be efficient—but if you’re nervous about the mutual funds that you have selected or you’re uncertain about the investment allocation of your 401(k) plan, then you may need to revisit your strategy.
Start by partnering with a financial planner who will help you focus on your priorities and goals. It is not enough to identify goals and implement a plan; monitoring your progress underpins the foundation of ongoing financial advice and goal-tracking.
One way I help my clients organize their finances is by investing heavily in software and technology. My clients can access all of their financial information any time, anywhere, on any device. Not only can they view their investments that our firm helps them manage, but they can also see their 401(k) plans, savings accounts, and even liabilities on any phone, any tablet, any computer—Windows, Apple, Android.
That’s simplicity at work! The organization and clarity is appealing regardless of age, gender, or level of wealth. Whether they’re Millennials or Boomers, they want to see their holdings online, integrated, in one place.
Choose a financial planner who can help you see the big picture.
Sometimes I sit down with a client right by my side and re-balance their portfolio—real time, right in front of them. Due to compliance requirements, they log in and control the keyboard. Of course some prefer that I walk them through it over the phone. Clients appreciate that I work with them in the way that makes them feel most comfortable, and that they can finally cross this important task off their to-do list. They leave our meeting or end the phone call feeling positive about their financial future.
One simple way I help clients consolidate and integrate is by encouraging them to automate their credit card payments. So many clients travel, and they sometimes forget to pay their credit card bill. I tell them, “Automate that payment so that you pay the minimum amount due every month. And then you can pay off the credit card in full when you return or when you remember.”
They have the money; they’re just really busy. So automating helps them save the $30 late fee.
Scroll down for five reasons to integrate—by automating and consolidating—your finances. That way when you’re ready to move into Act 2 of your life, your finances will be ready for your next venture, too.
1. Consolidate financial accounts to reduce paperwork.
The goal is for all of your banking and brokerage activity to be at the institution where your deposits and investments are. That way, you will receive just one statement detailing all of your holdings and the activity associated with each.
Remember: The number of accounts does not determine one’s level of diversification. You could have 10 accounts at different institutions and still not be properly diversified.
2. Automate to more easily manage your monthly cash flows.
3. Automate to reduce the chance of errors.
4. Automate to simplify tax preparation and record-keeping.
5. Consolidate to centralize estate administration, in the event of disability of death.
As a financial planner, it’s extremely comforting knowing that I’m helping my clients prepare to send their children off to college, save money to cover wedding expenses, and even be able to have one less worry if they have to face an unexpected loss or illness.
Whatever shape your Act 2 takes, I hope it will be fun, fulfilling, and financially secure!