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Q Money: Making your list and checking it twice

Visions of sugar-plums have never danced in my head but memories of frigid temperatures sent a shiver down my back over our recent Pride weekend when my partner and I hosted our former neighbors, Gil and Leland, from the Midwestern chapter of our lives.

Our friends always enjoy this reprieve from the cold, which I understand completely having adjusted to the Palm Springs concept of winter.

After taking in the parade, we settled into a nice brunch on our patio, enjoying sunshine and blue skies. Those Midwestern temperatures seemed a million miles away as we swapped stories developed over nearly 30 years of friendship.

But the tone changed as Gil and Leland, who are also clients of mine, said they needed to talk about their finances. My always-observant partner took this as his opportunity to go inside, pull out his Christmas list, and check it twice. When I heard those keyboard keys clacking, I knew this couldn’t be a good thing for my checking account.

Gil and Leland explained that they had taken on the responsibility of a dependent and felt it necessary to revisit their investment objectives. They already knew that this new responsibility was impacting their financial plan. With Gil retired and Leland having just turned 60, they were concerned whether their money would last and how to incorporate their new family member into their estate plans.

Gil has always been rather risk averse, so he and Leland had framed their plan accordingly around Gil’s risk tolerance – the amount of investment risk Gil could psychologically bear. Risk is primarily about market volatility for financial advisors. But for individuals, risk tolerance is a major determinant in their ability to reach overall financial goals, such as a secure retirement or caring for their heirs.

Since leaving a legacy was now more important to them, it was time for Gil and Leland to adjust their financial plan – and its timeframe – to include planning for someone they now felt responsible for after they were gone.

They knew they needed to reevaluate their priorities and adjust their investment approach accordingly, to include a new risk capacity that would allow them to create an estate that was not previously important to them.

Though not all adjustments would be easy, such as downsizing their home, we developed a revised plan that would continue to meet their current needs, as well as beyond their lifetime for their dependent. We adjusted their investments to assure growth and provide income, with instruments including a fixed income annuity. Creating an estate plan is also underway and should be revisited every 3-4 years.

So in the spirit of the holidays, remember Gil and Leland when you think of the jolly man in the red suit “making his list and checking it twice”.

In fact, year-end is a great time to look at your financial and estate plans and check them twice to be sure you have planned for the long-term needs and not just the present.

It will start your New Year off right!

Mark Marshall is a Vice President and Senior Financial Advisor at the Palm Springs office of Integrated Wealth Management, a Registered Financial Advisor, located at 787 N. Palm Canyon Drive. He has more than 30 years of experience in managing investment portfolios for both individuals and institutions. You can reach him at 760-969-7107 or by email at marshall@IWMgmt.com. If you’d like a “second opinion” about the correct investment decisions to be making for your portfolio, Mark will be more than happy to give you a free analysis. You can reach him at 760-969-7107 or by email at marshall@IWMgmt.com.