Financial, Investment and Estate Planning for Women€¦ · financial planning as an investment in...
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Financial, Investment and Estate Planning for Women Presented to the Birmingham Bar Association
Transcript of Financial, Investment and Estate Planning for Women€¦ · financial planning as an investment in...
Financial, Investment and Estate Planning for WomenPresented to the Birmingham Bar Association
Presenters
Heather Locklar, JD
Elizabeth Brasher, JD, CWS
Financial and Investment Planning
What is Financial Planning?
•A process, NOT a product•Long-term method of managing finances (money,
investments and other assets) to meet your financial goals•Process includes:
•Investment management•Debt management•Estate planning•Retirement planning•Risk management
Presenter
Presentation Notes
Think about your life and the people you love. You need to identify each of these for you and your loved ones. What do you want your life to look like in the present and the future, and how can we help you utilize the resources you have and can access responsibly?
Step 1 – Create a Financial Plan
• Complete a financial assessment and create a budget• Identify values and write out a financial mission statement• Set initial goals with timelines• Monitor and assess progress• Adapt for life changes
Be SMART
• Create a financial strategy that’s intentional.
Presenter
Presentation Notes
This acronym is often used to set life goals or financial goals. Specific – be as detailed as possible (Who/What/When/Where/Why) Measurable – set a goal for how much money you’d like to have at retirement – specific number vs “want to be rich at retirement” (How much? How many? How will I know when it is accomplished?) Achievable – where team comes in – WebMD can’t really diagnose you – call on your team of trusted advisors to help you determine what is achievable based on your goals/resources (How can I accomplish this goal? Is it realistic based on constraints?) TIP: Beware setting goals that someone else has power over. For example, "Get that promotion!" depends on who else applies, and on the recruiter's decision. But "Get the experience and training that I need to be considered for that promotion" is entirely down to you. Relevant – make sure these goals are not your sister’s or your friend’s goals but rather YOURS. Ensure that your goal matters to you, and that it also aligns with other relevant goals. (Does this seem worthwhile? Is this the right time? Does this match my other goals? Is it right for ME?) Time bound – put a time frame on it. (When? What can I do 6 months from now? What can I do 6 weeks from now? What can I do today?)
Step 2 – Make Financial Management Decisions• Objective is to be positioned with a lifetime of post-
retirement income sufficient to maintain your desired lifestyle without completely depriving yourself in the present
• Choose investments wisely• Choose your team of professionals wisely
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Examples: Short Term NEED – Pay off $10k in credit card debt Short Term WANT – Save $2k to go on a trip Medium Term NEED – Pay off auto loans Medium Term WANT – Invest in 529 plan for your kids/grandchildren Long Term NEED – Save for retirement Long Term WANT – Buy a vacation home
Investments
Stocks Real estate Law practice/business
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As trusted advisors, we are a reliable and consistent resource to help you implement the correct and unique strategy we design together. You may need each of these team members, and you may not. You may need others as well. We will help you identify what is necessary to help you achieve your financial dreams.
Your investment profile determines investments appropriate for you
Presenter
Presentation Notes
Also discuss risk tolerance here? Or need another slide?
How your investments fare year to year can be unpredictable…
Presenter
Presentation Notes
Also discuss risk tolerance here? Or need another slide?
Trust diversification – even when it’s hardYears S&P 500 Diversified
Portfolio
2000–2002 (-37.6%) (-16.3%)
2003–2007 +82.9% +73.8%
2008 (-37.0%) (-24.0%)
2009–2017 +258.8% +152.2%
Total Return +146.6% +166.1%
“I lost money”
“I didn’t make as much”
“I lost money”
“I didn’t make as much”
“Diversification wins even when it feels like its losing”
$266,060$246,570Gr $100K
2018 (-4.4%) (-4.6%) “I lost MORE money”
Source: Morningstar as of 12/31/18. Past performance does not guarantee or indicate future results. Diversified Portfolio is represented by 40% S&P 500 Index, 15% MSCI EAFE Index, 5% Russell 2000 Index, 30% Bloomberg Barclays US Aggregate Bond Index, and 10% Bloomberg Barclays US Corporate High Yield Index. Index performance is for illustrative purposes only. You cannot invest directly in the index.
Time in the market vs. timing the market
Presenter
Presentation Notes
Also discuss risk tolerance here? Or need another slide?
Wise Words
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
-Warren Buffett
CommonProblems
According to a PWC 2020 Employee Financial Wellness Survey, 54% of respondents named financial or money matters/challenges as their top cause of stress.
Not Surprisingly…
Problem: Underfunded or unfunded Emergency FundSolution: Automate savings into a high yield savings account at an online bank
• Online bank: out of sight out of mind• Savings account: keep it liquid. This is for loss of income,
medical emergencies, broken air conditioners.• Focus on what you can control. You cannot control stock
market volatility or the happenings of the world and economy. You can control your own preparedness.
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Problem: The Latte Factor
Solution: Eliminate unnecessary spending (costs are annualized)
• Overdraft fees $180• Credit card late fees $150• Overnighting packages (procrastination) $180• ATM fees $120• Parking tickets $175• Speeding tickets $175 (which also increases insurance!)• Convenience store purchases and Starbucks on the run
$1000• AND THERE’S MORE!
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Problem: The Latte Factor Continued!Solution: Eliminate unnecessary spending• Automatic charges to credit card not even used
• Netflix $92• Gym membership $480• Magazine subscriptions $50• Clothing with tags still on $300 (sitting in closet!)• Premium cable channels not watched $360TOTAL WASTED SPENDING $3,247 ($62.44/week)That same $62.44/week invested in a retirement account at a 4% tax free rate of return enhances your retirement savings by $140,628 over the next 25 years!
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Problem: Not seeking financial advice until a crisis occursSolution: Seek comprehensive financial planning to stay proactive and not reactive
• PWC 2020 survey says 42% of respondents seek financial guidance in the midst of an emergency or crisis.
• Be proactive, NOT reactive• Ben Franklin Quote: “If you fail to plan, you plan to fail”• Invest in your financial wellness and explore comprehensive
financial planning as an investment in yourself and your future.
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To Summarize
Create a financial plan Make financial management decisions Invest wisely Have an emergency fund Don’t spend wastefully or be overwhelmed by debt Seek financial advice before a crisis occurs
Engage in Thoughtful Estate Planning
Complete the Estate Planning Process and Execute Documents
The three most important documents:
Your Plan Will Be Personal and Unique Every family presents its own unique set of dynamics and needs. It is important to discuss your legacy goals with your lawyer to make certain they are achieved in the most administratively and tax efficient manner possible.
Appropriate Beneficiary Designations
Assets such as Life Insurance and Retirement Accounts have beneficiary designations which are often completed upon the opening of an account or purchase of a policy. Make sure your designations reflect your current wishes as these designations will trump your Will.
Online Accounts
As we trend to a more electronic and virtual society, many no longer receive paper bills or statements. It is important to let your appointed fiduciary know how to access your online accounts after your passing.
Open Communication is Important
• Talk to aging parents.• Talk to adult children.• Are you in the sandwich generation? • If appropriate, discuss your own plan with your children.
Current Estate Tax Law
• Federal Estate Tax Exemption: $11.58M per person in 2020• Portability: Spouses can “share” exemption• Alabama has NO state estate tax
To Summarize
Complete the Estate Planning Process and Execute Documents Select Appropriate Beneficiary Designations Provide Information Regarding Online Accounts Communicate Openly with Family Stay Current on Estate Tax Laws
