How I Help You Plan Your Uncertain Future

Posted by: Joseph Kuo | November 18, 2022

Financial planning is about way more than getting a good rate of return for my clients. As a financial life planner, you’d think that I spend a lot of time running financial projections, analyzing the financial impact of client actions, and creating potential scenarios of what’s to come. 

I do, but it’s far from the only thing. When I engage with a new client, common questions include:

• How much do I need to save before I can stop working?
• How would a major financial “what-if” scenario affect when I could retire?
• Is it a good idea for me to invest in [investment type]?

The answers to these questions—and how we arrive at them—vary widely by client. So a big part of my work is actually not number crunching, but conversation. 

As part of the overall discovery process with new clients, we first start with a chat so I can get to know them and understand what their goals are. As an advisor trained in motivational interviewing techniques, I will also go more in depth to learn the values and priorities that drive their goals. I’ll then drill down a bit to gain insight on their concerns, uncertainties, and fears. It is only then that I start using their current financial numbers to start building a plan to accomplish the financial future they want to achieve, in a way that meshes with their values. Once I present the future possibilities and potential scenarios to the client, it’s often a great conversation starter for giving them even more ideas and choices they might not have previously considered.

Leaping Into Uncertainty

Sandra* was a Vice President for a large tech company. When she signed on with me, her initial financial picture seemed fairly straightforward. She was making a very good salary, had some stock options, and was on an easy glide path towards a nice comfortable retirement. 

But deep down, she knew that she could do more. As our discovery process continued and we started talking about priorities and values, she revealed to me that she wanted to make a direct impact on social causes she cared deeply about. As part of that goal, she wanted to take a couple of years off from the tech industry to focus on those causes.  

She did realize that this idea would create uncertainty and put her financial safety at risk. If she were to leave her VP job, she would be putting a pause on a high paying career. Her fear was that when it came time to return to the workforce, she would not be able to find another high paying job and that the interruption in earnings would keep her from having enough money to retire. 

The easiest solution of course would have been to wait until retirement. But the desire to help others held especially deep meaning to her. It was a feeling she could not put off for that long. 

So we built a plan with the goal of accumulating enough savings for her to take the leap in about two years. The plan accounted for how the break from earnings would impact her retirement savings, and how she could vary her living expenses during the break to mitigate that impact.

We also talked about the potential career choices that she would choose when it was time to return. This conversation reminded her that she had professional skills that were in high demand. While it was far from certain that her next job would have “Vice President” in the title or would even start at the same pay as her previous position, her experience and skill set would open her up to other opportunities aside from her previous career track. No matter what, her qualifications should enable her to find a good paying job that would help her continue to save for retirement.

These measures went a long way towards alleviating her fears. Knowing that her goal was attainable gave her a strong sense of confidence and progress. As we carried out the plan and she saw her savings build up, we were able to update the plan and add more potential options for her to consider. Seeing the progress and having the additional choices gave her even more confidence as well as a sense of steadiness.

Life Will Be Uncertain, But We Can Manage It

We spend much of our time and effort trying to avoid uncertainty in our lives. But in the end, we won’t be able to completely eliminate it. 

There are two important things to remember about most uncertain or negative situations. First, there’s almost always something we can do. We can use our skills and experience to mitigate negatives, accentuate the positive, and guide the situation towards something better. So instead of worrying about the uncertainty, we use our skills and experience to mitigate the negatives and accentuate the positive. We can still work toward something better.

Whether by yourself or with an experienced financial advisor, planning and good information will help make the positives and options more apparent. In a financial situation, once you run the numbers there are bound to be a range of projections from pessimistic to optimistic. 

With this sort of information in hand you’ll be able to gain insight into the factors behind the projections and gain ideas on what you can do about them. In Sandra’s case, it was through the planning process she was able to see that her situation was feasible and that she did have the skills to find another good job.  The overall planning process, including the conversation and the questions, can give more ideas for solutions and let you confidently deal with the uncertainty. 

*composite example