“I’ll light the fire… you place the flowers in the vase that you bought today…”
— from “Our House” as performed by Crosby, Stills and Nash
Like a lot of folks, I enjoy watching “Fixer Upper.” The program is entertaining, relaxing and sometimes even inspiring, like the recent episode when Chip and Joanna Gaines did a complete remodel for a veteran and his disabled wife. I now know more about the design use of shiplap and the topography of Waco, Texas, than I thought I ever would.
Part of what I admire about the Gaines is they take into account the boundaries of an existing home and the parameters of someone’s budget, and then attempt to accomplish as many of the homeowner’s dreams as possible. They acknowledge that the homeowner must prioritize and make some choices about how their money will be utilized.
Essentially, they are saying: “We can’t build you a mansion. That’s not realistic. But based on what we’ve got to work with and what you can afford, you can ultimately enjoy a very nice home.” The homeowners have a general idea about what they desire their home to look like, but they depend on Chip’s construction acumen and Joanna’s design skills to transform the property into a more livable and lovely home.
When folks confer with a financial advisor to discuss their financial goals, the first question an advisor will frequently ask is “What do you want this money to do for you?” Interestingly, investors invariably answer by describing a desired future that includes beaches, golf, grandchildren and travel. They are much more likely to paint a picture of the lifestyle and activities they hope to enjoy and pursue in their leisure years than initiate a discussion about individual securities. In other words, they provide a mental picture of their “financial house.”
Dreams are qualitative. Financial plans are quantitative. The best advisors seek to understand the investor’s dreams. And the most successful investors understand what is possible and realistic and are willing to prioritize their retirement goals.
There are limits to what can be accomplished with every sized nest egg. When Chip and Joanna discuss budgeting with homeowners, and provide the cost of changes, there is invariably an increase in equity in the home after the remodel. In this sense, the couple serve as “home advisors.” Investment advisors perform a similar function with financial planning, portfolio construction and behavioral coaching. Given the amount of investable assets, the investor’s risk tolerance and the potential need to generate income from their investments, the advisor endeavors to maximize growth in the portfolio and throw off income simultaneously, if that is an objective. Building a successful retirement plan is possible with the hard work of disciplined savings over a lifetime.
Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 – www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.