Planning for the Unpredictable

A Q&A with Lindsy Owens, Estate and Financial Planning Associate

Many clients come to Boston Financial Management (“BFM”) with one question in mind; “How do I plan for the unpredictability of the future?” Lindsy Owens, Estate and Financial Planning Associate at BFM, is used to addressing this common and very important question. “Our answer is always consistent; the best way to prepare is to have a plan in place that is reviewed and revised over time as your life and circumstances change. Our Estate and Financial Planning Team is available to guide each client through the process”, says Lindsy. Part of guiding clients through the process is answering the following questions:

What can BFM do for me as a client of the firm?

With the unpredictability of the future, you may hear yourself asking, “What should I be doing?” or “Am I doing enough?” Here at BFM, we take these questions as our responsibility to help you reach a place of ease and comfort. With the resources at BFM, our team can provide a comprehensive and dynamic plan for both individuals and multi-generational families. In doing so, we always put our clients’ interests first, resulting in a more transparent relationship.

What does financial planning mean to BFM and its clients?

Each client’s financial plan may take a different form depending on their goals. Between planning for education, retirement, philanthropy, and the risk of the unknown, each plan is as unique as you are. We help clients uncover their personal goals by having conversations surrounding where they are today and where they want to be in the future. Our job is then to help build the bridge between the two with a personalized financial plan.

What is the importance of cash flow and risk tolerance?

We start the financial planning process by evaluating the client’s goals, current cash flow, balance sheet, and timeframe. The balance sheet compiles assets and liabilities such as cash savings, investments, and outstanding loans. It is important to evaluate fixed expenses included in the cash flow to be sure there is an appropriate emergency fund. An emergency fund is the amount of cash needed to cover three to six months of expenses should an unexpected event occur. This step is critical in the process as it creates the foundation of the plan, allowing us to spot areas that need adjustments.

After the foundation is in place, we build out the plan by analyzing strategies that best serve our client’s goals and objectives. For example, for clients who want to save for their children’s or grandchildren’s education, our team can help compare the pros and cons of using a college savings plan, trust, or direct gifts. Similarly, we can evaluate future cash flow to consider income tax saving strategies with a client.

Every plan is different based on each client’s risk tolerance. Another way to look at risk tolerance is to think, “What is my sleep factor?,” meaning how aggressive should my portfolio be in pursuit of my goals while balancing my need to sleep well at night? We can help clients determine their risk tolerance by analyzing potential outcomes based on cash flow and asset allocation assumptions under several different market scenarios.

Goals and objectives shift through life. How do the financial plans created by BFM evolve with these changes?

Life is not meant to be stagnant, and neither is your financial plan. There are three financial phases of life: accumulation, preservation, and distribution. Within each phase, new planning methods are introduced. There may be unexpected life events, such as a change in employment, divorce, illness, or death. Within our financial planning process, we evaluate different scenarios to account for these unforeseen events. Our goal is to ease our clients’ minds by walking through these scenarios together and determining the best methods to create a successful plan.

You often hear not all financial firms are the same when researching different planners. What makes BFM stand out from the crowd?

BFM is unique given the depth of our resources and our extensive, knowledgeable team. The Estate and Financial Planning Team works closely with clients, their Wealth Manager, and our dedicated Research and Operations Teams. Together, we implement and monitor our clients’ financial plans while frequently meeting to adjust for life events. With our long-lasting client relationships, we also believe in the importance of planning for future generations. We combine estate planning techniques with financial planning to reach clients’ goals. Our Estate and Financial Planning Team consists of members with strong legal and financial planning backgrounds. We also work closely with our clients’ outside tax, legal, and insurance advisors. We provide clients with a complete picture of their estate and financial plans through our holistic approach.

What is the best age to start the financial planning process?

There are many benefits to starting your financial plan early on! We promote financial literacy for clients of all ages. The best age for financial planning may be when one starts their first job after his/her education is complete. Even those individuals who do not have significant earned income may benefit from financial planning tools. A prime example is contributing to a Roth IRA. If a young adult has earned income, they may begin investing in a Roth IRA which allows funds to grow free of capital gains tax, and provides tax-free income at retirement. Our Estate and Financial Planning Team is here to help teach the advantages of getting a jump start on planning for your future.

What are some common financial planning trends that BFM is currently seeing?

The importance of the client-planner relationship is perhaps most pronounced in times of uncertainty. Clients are thinking more about the future and making sure their estate and financial plans align with their wishes. We host family meetings whereby we introduce ourselves to the next generation and discuss educational pieces or help facilitate a conversation around family wealth and what this will mean for them. Our clients can take comfort in knowing their family will have a team to assist them across generations.

Another trend involves the implementation of new technology within the wealth management industry. Since the pandemic, technology adoption has accelerated to enhance the client experience. BFM knows the importance of introducing new technology with the appropriate cybersecurity precautions, providing clients with a secure, individualized portal, and the ability to meet virtually.

We have also noticed a trend in the younger generation to want to become impact investors. Adjusting our traditional financial and estate planning to meet the needs of the next generation is essential, and we have a variety of planning techniques to address the preferences of our clients.

The team at Boston Financial Management is always available to answer further questions regarding your financial planning goals. Please call us at any time, at 617-338-8108.

Professional Designation Minimum Requirements Disclosures:

AEP® – Accredited Estate Planner®. Minimum requirements for the AEP® designation include active practice for a minimum of five years within the following disciplines: accounting; insurance and financial planning; law; philanthropy; and trust services with at least one-third of the individual’s time devoted to estate planning. Additionally, one or more of the following professional credentials: JD, CPA, CLU®, CFP®, CPWA®, CFA, CAP®, CSPG, CTFA, MSFS and MST is required, along with three professional references and current membership in an affiliated local estate planning council.

CDFA® – Certified Divorce Financial Analyst®. Minimum requirements for the CDFA® designation include a bachelor’s degree with three years of approved on-the job experience along with successful completion of the CDFA® examination consisting of 150 multiple choice questions. 30 hours of continuing education is required every two years.

CTFA – Certified Trust and Fiduciary Advisor. Minimum requirements for the CTFA designation include 5 years minimum experience in wealth management, a bachelor’s degree and passing the CTFA examination. 45 continuing education credits are required every three years.