Bob Buford used to ask people what the one thing they “had in their box” was. In doing so, he was prodding them to figure out what matters most in life. That’s an important question to answer. After all, how can you make the right decisions if you don’t know your purpose or central tenets? That’s true in every aspect of life, and your financial strategy is no exception.
The problem is most executives don’t apply that thinking to defining what financial success looks like. Rather than establish personal benchmarks to strive for, they think that if they just beat some arbitrary market benchmark like the S&P 500 — they must be doing all right.
For most, beating a benchmark like that is pretty meaningless. That’s because it’s using someone else’s definition of success rather than your own. It’s like buying a boat because you think that’s what you’re supposed to do, only to realize that it doesn’t actually bring you joy. To truly be successful, you need to define what success looks like for you and your family.
Practically speaking, that means you shouldn’t think about your financial goals in terms of beating the market or obtaining a certain level of wealth. Rather, think about how you want to live, and start working backward from there. If one of your central tenets is to be anti-fragile, for example, and not susceptible to disruptions in the market or in your personal life, then you’re going to want to have a considerable amount of cash on your balance sheet. If you value experiences over things, then you might need a particular liquidity strategy to finance those experiences every year. If meeting the long-term financial needs of your family is what matters most, then having the right trust and estate tax strategy in place will be key.
Whatever the case, it’s only when you have identified your purpose — and what success looks like for you — that you can develop a financial strategy that aligns to it. And that’s where your one-page plan comes in.
A One-Page Plan for Financial Success
When it comes to their finances, executives often tend to make the same mistakes. They rarely allocate their assets in a way that’s aligned with their goals in life until they have some kind of “aha” moment. Unfortunately, more often than not, those moments only come after something bad happens, like when the price of their company’s stock suddenly drops.
Developing a one-page plan is the antithesis of that. It gets you to think through these issues now and gives you a simple roadmap to ensure that your asset allocation actually lines up with your goals. That’s critical to ensuring the lifestyle you want for you and your family. Often that involves figuring out how you will deploy your capital in ways that are meaningful to you.
Remember: Not all of your family’s capital is just financial. You may also want to develop your family’s intellectual capital by funding your grandchildren’s education, for example, or increase your social capital by starting a nonprofit to support an important cause.
It’s only when you know what your purpose is, and all of the different ways in which you want to deploy your capital, that you can determine how much risk to take in order to make it all possible. Your one-page plan will articulate your purpose and what you’re actually trying to achieve. It then defines the targets you will need to hit over the next three to five years to stay on track, as well as the objectives you’ll need to hit over the next 12 months and even every 90 days.
Simply put, it’s a framework for meeting and managing your progress against your financial goals that’s both actionable and quantifiable, all on a single page. Within this framework, we can also ensure that you’re covered from a tax, legal, insurance, banking and lending perspective, which all need to form part of your overall financial strategy.
The result? A simple, straightforward plan to deliver financial outcomes you actually care about.
The result? A simple, straightforward plan to deliver financial outcomes you actually care about.
Any opinions are those of John Pulliam and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Diversification and asset allocation do not ensure a profit or protect against a loss. Investing involves risk, and you may incur a profit or loss regardless of strategy selected.
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