Consistent reviews and stress testing are beneficial for helping to keep people on-track to meet their financial goals.
"Like physical health, early detection and resolution of financial issues can prevent catastrophe. At iNNOVA, there's no such thing as 'set it and forget it' planning," says William “Chip” Bromley Jr., CAIA, AIF, a principal and co-founder of iNNOVA Wealth Partners in Newtown. "We’re consistently updating and stress testing our clients' plans to help insulate them, even when changing circumstances would otherwise put them at risk.”
iNNOVA's financial experts advise clients in planning for retirement, taxes and overall finances, as well as managing investments. They also host signature "roadmap" classes.
City Lifestyle Newtown asked iNNOVA how to jumpstart a beneficial financial plan for a new year.
- What do you mean by "stress testing" financial planning?
Stress testing our clients' financial plans involves simulating future possibilities to see how robust their current plan is to economic shocks. Examples would be rising inflation, plus quick or large drops in the stock market. A successful financial plan doesn't simply consider historical financial performance.
- What specific financial areas should be prioritized in a new year?
Each year, clients should review their goals, spending needs and planning around major life events, such as having a child or getting married or divorced. Also, review any milestone birthdays that could affect social security or required minimum distributions. Recently, we also suggested clients review any automatic renewing subscriptions, as we find many clients continue paying for services they no longer use or value.
- How is accurate net worth determined?
Mathematically, net worth is determined by subtracting any liabilities from your assets, but the importance of a net worth goes well beyond this formula. Many clients forget to include their human capital as an asset (ability to earn future income), which can many times be a young client’s largest asset. Knowing your net worth is valuable, for instance, when a client is approaching a bank for a personal loan because the potential to pay back the bank will heavily depend on their net worth. As a client approaches retirement, their net worth will be key to determining the asset pool they can count to live on and/or the liabilities they must plan to pay down.
- How can women best tell they're on-track for retirement?
Generally, women have longer life expectancies than males so planning for longevity is a key focus. Making sure risk management strategies are in place, such as long-term care insurance and an analysis of all sources of income in retirement, should be done, including social security benefits, any pension income from employment as well as assets in brokerage accounts or other retirement accounts, such as 401K-s or IRAs.
- What approach do you take to help clients accomplish their financial goals?
iNNOVA takes a holistic, goals-based approach when helping clients accomplish their financial goals. Rarely does a client come to us with one income stream to support one goal. Because our clients' lives and financial situations tend to be complex, we must help them consider all assets and income streams to support multiple goals with different timeframes. Many times, we call this our clients' financial puzzle and the planning is helping them put all the pieces in place.
- When does a person know they're striking a good balance between long-term and short-term needs?
Everyone should consider future health care costs when planning for retirement. There are steps you can take and tools to use as you’re approaching retirement to help plan for future health care costs, which typically account for a large portion of expenses later in life.
- For someone who becomes widowed, how do they ensure that they're financially secure?
When we can, preparation helps a lot, as we’ll typically advise clients on life insurance policies to cover any lost current and future income from a deceased spouse. Also, there are many unique financial considerations for a widow, such as determining all the different types of accounts that a deceased spouse owned and making sure they’re transferred and titled appropriately. A widow has different social security income options than a single person or someone that's been divorced. Unfortunately, many couples allow one spouse to handle the finances. When that managing spouse passes, this can leave a grieving widow the stress of simultaneously wondering about their financial security. We try to help alleviate that pressure.
- How can one align their finances with their values in retirement and beyond?
Many clients come to us having worked diligently to “retire successfully," but oftentimes they haven’t put enough consideration into what they want to do with the extra 40-plus hours each week they now have that was spent working. If a client values giving back to charity, community or family, many of our discussions focus on giving a combination of time, skills and/or money. If the goal is to donate or gift monetarily, we strive to help our clients achieve this in the most cost-effective manner.
12 Terry Drive, Suite 203
info@myinnovawealth.com
888.270.1574
MyInnovaWealth.com