Last year, during a client coaching event, I asked participants to write down on index cards what was keeping them up at night.
When I collected them, the top three answers were:
- ISIS;
- a cyber attack on the U.S. power grid; and
- the deficit.
These are, of course, big problems over which these people have no control. But we could, and did, talk about how national and world affairs affect their financial affairs, and we discussed how they could adjust their planning accordingly.
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As a financial coach as opposed to a more traditional financial adviser, sure, my focus is still on helping my clients accumulate wealth and to preserve and protect their assets from market losses. But I also talk to people about broader issues—their hopes and concerns about money and the world in general—and it actually helps to take the emotion out of planning.
In my quarterly coaching events and monthly public seminars I get a chance to talk about the things people shouldn't get alarmed about just because they pop up during the 24-hour news cycle. And if we can, we set the record straight on the "facts" they pick up from a variety of sources, including friends or on Facebook.
For example, I'll ask, "Who owns most of our country's debt?" The most popular answer is China. But in reality, the biggest holders of U.S. debt are the Social Security trust funds and other federal government accounts, as well as the Federal Reserve System. China owns less than 8% of our debt.
We'll talk about the election, and which party is better for Wall Street. I tell them I believe that the market is bigger than the presidency, that Wall Street likes bipartisanship and checks and balances. Yes, right now we're seeing some volatility because the markets don't like uncertainty. But after things settle down, so will Standard & Poor's 500-stock index. But it's also important to diversify—and we talk about how people can fall short sometimes by investing too heavily in just one or two asset classes.
Another popular topic is gold because in temperamental times, when the market goes down, you'll see a lot of commercials touting this precious metal as a safe haven, a cure for everything. People wonder if they should change their financial plan and invest more in gold. But that market is as subject to speculation and volatility as other markets. At one of our seminars, we asked, "Gold: What is it good for?" The answer: Gold is good for jewelry.
Of course, inflation is always a good topic. Right now, interest rates are low and paying at the pump isn't that painful. People just don't see inflation coming. But I'll ask: Have you noticed that cereal boxes are getting smaller? I've enjoyed Clif Bars for as long as I can remember, and they are definitely getting smaller! Inflation is there; it's just harder to see.
Lastly, not everyone has a pension anymore—those days are over! How do retirees produce income off of their assets during these volatile times? During the accumulation phase of life, pre-retirees are contributing to their 401(k)s, IRAs and other retirement accounts.
Once you retire, you have entered what I like to call the harvesting phase. This is when you should consider enlisting the help of a financial adviser or coach. Increasingly, people are retired for almost as long as they worked. So it isn't just about what you make; it's also about what you don't lose. People are losing their hard-earned savings in ways they don't even realize. I find that investors are often oblivious to all the hidden fees in their accounts, and they fail to recognize the threat inflation has on their future spending. With the odds in your favor for a long life, it's important to have a financial coach help create an income plan that you don't outlive.
You should strive to alleviate concerns about how world affairs might affect financial affairs by focusing on the things you can do something about. With a financial coach on your side who can help take the emotion out of investing and create a customized retirement income plan, you, too, can get on the path toward financial independence!
Alfie Tounjian is a Certified Financial Planner™, an Investment Adviser Representative and founder and president of Advantage Retirement Group and Tounjian Advisory Group LLC. He is also a licensed insurance professional.
Investment advisory services offered through Tounjian Advisory Group LLC, a Registered Investment Adviser.
Kim Franke-Folstad contributed to this article.
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