Almost everyone we have an opportunity to work with professionally has some idea of what they want to accomplish financially. The goals may be large or they may be small. In each case, a financial hierarchy is set into motion encompassing 3 distinct levels: financial freedom; financial security; and financial peace.
The foundational level is financial freedom. While most aspire to progress onto the other levels, many will spend their lives trying to achieve this first level. Financial freedom is characterized by having “enough” money. With sometimes large “gaps” between what investors say they “need” and the resources they actually have, achieving “enough” requires focus. A good synonym for freedom is liberty and that word embodies what those who have “enough” begin to feel. If still working, work becomes “optional” instead of being “mandatory”. For many, this is a wonderful stage to experience. From an advisor’s viewpoint, it is truly uplifting to assist clients along the path until this level is firmly within their grasp.
Lest we become complacent, many investors will indeed cross over from Financial Freedom into the Financial Security stage. During this stage, confidence is developed that your wealth is secure. Our financial lives are experiential, and the more experience we possess with having “enough”, the more we are willing to look ahead and focus on the proper role of risk in our financial lives. Risk is not volatility so much as it is the risk of doing badly in bad times. In this stage, you become comfortable with seeking the “just right” risk level; that level where expected returns provide both for needs and cost of living increases.
Finally, the stage of Financial Peace. During this stage, clarity is achieved concerning financial goals including your legacy. You begin to look beyond yourself and focus on your loved ones and the causes important to you. Financial decisions are easier because the choices are about the future more than the present.
In each stage, our role is to render un-conflicted advice and to keep clients on the proper path. Let us know how we can be of particular assistance to you.