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What I Learned From Getting A Second Opinion On My Family’s Finances

October 27, 2015

As I patiently wait with my husband in the sleek, new boardroom, I can’t help but wonder what I’m about to hear. Hand-holding-gift-001Will I be surprised, upset, thrilled, scared or somewhere in between?

Does it seem strange that a finance professional is getting a second opinion on her own financial situation?

Finally, I convinced myself that it’s “normal”; not a sign of weakness. Why not? What’s there to lose (other than my husband’s praise or my confidence in my own abilities)? Would a doctor actually treat herself for her own health problems?

In comes our very competent advisor and 2 of his professional colleagues that we’ve never met before. As we smile, greet, sit, and chat, we are handed a beautifully bound and tabbed 44 page document called Our Wealth Plan.

Wow, very impressive but what does it actually say?! The geek inside me can’t wait to dive into the details.

The Conclusion

Thank goodness for the Executive Summary!

As the professionals walk us through the summary, assumptions and major findings, I start to relax and feel better. I discover my own (reems of)  analysis is rather consistent with their viewpoint- whew!

Our advisors do a superb job of addressing the key question that I asked of them; Given our level of wealth, how much can we safely spend in retirement? They also present ideas on estate planning that we have not considered (and definitely neglected)- food for thought. All in all, a useful & positive experience that gives peace of mind to the “money expert” in our family. Thankfully, my husband is happy too- he does NOT have to go back to work!

Random Thoughts On Our Plan And The Process

1) Would a typical person know if their plan made sense?

Without some depth of financial knowledge, I’m not convinced that someone could assess the true quality of the plan. Are the assumptions reasonable taken together? The graphs are pretty but are the numbers that they’re based on realistic? Where are the risks? Do we have a back-up plan? Please, if you’re having a plan prepared, use a reputable, experienced and knowledgeable professional!

2) Value for money

Our plan was “free”- talk about great value for money! It’s part of the service provided by our commission-based investment advisory firm. I’m certainly not complaining but I think this helps to devalue the effort involved in real financial planning services while overvaluing that of investment advisory services. Who knows? When fees become more transparent, people will better understand why/what they are paying for and the value inherent in those services.

3)  Assumptions Drive The Plan- Be Sure They’re Reasonable

After the meeting, I couldn’t wait to comb through the details like a true analytical-type would do. I have fun picking apart the assumptions and notice that changing any of them (investment returns, lifespan, inflation, spending etc) will have a big impact on our wealth over time. We MUST make sure they’re conservative if we don’t want to run out of money in retirement! And, don’t forget a “cushion” for the unexpected events.

4) What Now?

It would be very EASY to let this newly created plan collect dust and do nothing. In reality, it’s up to us to take action on the next steps presented in our plan. This takes effort and motivation (especially hard if you’re not financially inclined). I hope I/we can make it happen? Time flies and we’re not getting any younger!

5) Annual Reviews Are A MUST!

Life is full of surprises and the best laid plans may not transpire as we think. Our goals/needs could easily change. It’s critical to review our plan at least annually to see how we’re doing and how we might need to adjust (especially the “spending” part). The great thing is that the work effort will be less (as we’ve already got a good plan to start from). I’ve said it before- running out of money in retirement is NOT an option!

Related Posts:

Might Another Set Of Eyes Be Your Ticket To Financial Success?

Quiz #4- Do You Know What You Don’t Know About Planning For A Financially Healthy Retirement?

Proud founder of this blog Let’s Talk About Money, Patricia Gass, CPA, CA, provides personal finance coaching and education to improve your money skills. Follow her on linkedin, twitter or pinterest.

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One Comment
  1. I think getting a second opinion is a really smart idea. Not that we’ve actually done this! My husband and I do our planning and reviews together so there are 2 heads instead of 1! I couldn’t agree with you more about reviewing the plan yearly. We actually do it quarterly (could be also because we just love doing this) and we find this really helps us to stay on track.

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