At Altura Wealth Advisors, our financial planning process is built around three pillars of financial independence: Vision, Perspective, and Direction. The Vision Meeting helps define the life you want your wealth to support. The Perspective Meeting is where we start putting numbers behind that vision.
The goal is to help you understand your true financial capacity and the trajectory of your wealth over time. We’ve found that many people don’t just underestimate how long their money will last—they also underestimate what their wealth could allow them to do along the way.
PUTTING NUMBERS BEHIND THE VISION
Between the Vision and Perspective meetings, we send a Financial Efficiency Screening to gather the financial details we need to build your plan—from investments and income to taxes and liabilities. As we often tell clients, if it has a number behind it, we probably want to see it.
By the Perspective Meeting, we’ve put those pieces together to show you where you stand today, where your wealth is headed, and whether the life you described in the Vision Meeting is financially sustainable.
And we’re intentionally conservative with the assumptions we use.
For example, if you tell us you want $10,000 each month in retirement, we treat that as your core spending—the money you want available to live the life you’ve described. On top of that amount, we account for things like healthcare expenses, taxes, and liabilities (including a mortgage). Then, we model that spending, adjusted for inflation, all the way to age 100. We know you’re probably not going to spend the same amount at 85 that you did at 65, but we don’t assume your spending will slow down.
We’d rather beat up the plan from the beginning. It’s one of the ways we help clients answer the question that’s usually sitting in the back of their minds:
What if?
PLANNING FOR THE “WHAT IFS”
One of the stress tests we use is what we call the Lifeboat Drill. We model a 40% market pullback and, rather than assuming the market bounces back as usual and experiences outsized gains following the pullback, we assume a conservative rate of return from that low point. Then we consider how that impacts the client’s long-term plan.
From there, we test some of the other “what ifs” clients tend to worry about. What if the market drops right when you retire? What if taxes or healthcare expenses increase by 20%? What if inflation runs 1% higher than we’re projecting? What if investment returns are 1% lower?
The goal isn’t to predict the next unfortunate event. We know unexpected things will happen. The point is to build a plan that has already considered them.
If we can take an already conservative plan, put it through a series of unfavorable scenarios, and show a client they’re still going to be okay, that provides another layer of confidence.
It turns “What if?” into “Even if.”
TWO WAYS A PLAN CAN FAIL
Most people already know one way a financial plan can fail: You run out of money.
But there’s another plan fail that’s equally important.
Imagine waking up at 85 years old with a fabulous balance sheet—only to realize you could’ve done more when you had the time and health to enjoy it.
You would have taken your family on another trip. You might have bought the beach house. Maybe you’d have flown first class. Or maybe you would have given more away while you were around to see the impact.
That’s why understanding your financial capacity matters. We’re not telling clients they need to spend more just because they can—plenty of people are perfectly happy with their current lifestyle. But we want them to know what’s possible.
Because there’s a big difference between choosing not to spend your money and being afraid to spend it because you don’t know whether you’ll have enough.
YOUR PORTFOLIO SHOULDN’T DICTATE YOUR LIFE PLAN
Our philosophy is simple: Your goals and objectives should guide your allocations.
That’s where our time-weighted asset allocation approach comes in. Think of every dollar you have as an employee. Each one needs to do the right job. Some dollars need to fight market volatility. Others need to fight inflation. Which job they have depends largely on when you’ll need them.
If you’re going to need certain dollars within the next one to three years, we want those dollars to be stable and predictable (fighting volatility). For dollars you’ll need four to eight years from now, we still lean toward stability while introducing more growth (fighting inflation). As the timeline moves further out, the emphasis shifts increasingly toward growth because those dollars need to outpace inflation and have more time to ride through market cycles.
The goal is to put your money in the right place for when you’ll need it.
DON’T FORGET RULE NO. 1
To show how this works, we use another exercise based on Warren Buffett’s well-known rules of investing:
Rule No. 1: Never lose money.
Rule No. 2: Don’t forget Rule No. 1.
We fast-forward and pretend you’re retired. You need money from your portfolio, and for this exercise, you’re the advisor. Your growth assets are temporarily down, while your stable assets are up. Where do you take the money from?
Most clients get it right: the stable assets.
Now, another year passes. Growth is still down. Again, you pull from the stable side.
Eventually, the market recovers, and your growth assets are up. Now you can take from those assets while they’re ahead.
We do this exercise to illustrate an important point: you don’t want to be in a position where you’re forced to sell an investment while it’s temporarily down just because you need money to cover your expenses.
That’s why your portfolio is built to support your life plan—not the other way around.
GETTING MORE LIFE OUT OF YOUR WEALTH
Ultimately, that’s what the Perspective Meeting is about—we want you to understand your financial capacity and the trajectory of your net worth, so you can make confident decisions that help you get the most life out of your wealth.
For some clients, that means retiring earlier than they thought they were able. For others, it’s realizing they can spend more on experiences, take the kids or grandkids on a trip, give to family sooner, or support an organization that’s important to them.
And sometimes, nothing changes. A client might learn they could spend $15,000 a month and decide they’re perfectly happy spending $10,000. That’s okay, too. The important thing is that it’s an informed decision rather than one driven by uncertainty.
If you’d like help discovering your financial capacity, we’d be happy to guide you through the process. You can schedule an introductory call with our team here.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
LCW Services, LLC d/b/a Altura Wealth Advisors (“Altura Wealth Advisors”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Altura Wealth Advisors and its representatives are properly licensed or exempt from licensure.