This Is Why We Plan

This is part of an ongoing series of articles about estate planning and succession planning, written by Joe Maier, JD, CPA, Senior Vice President, Director of Wealth Strategy

Uncertainty. Fear. Confusion. All apt descriptions of the human condition over the last couple of weeks. Not since Sept. 12, 2001, have we woken up to a world that makes so little sense to all of us. And those emotions, particularly fear, have economic consequences. They affect supply, demand, income and wealth. And because this particular fear is different, specifically a global pandemic, we are experiencing an acute emotional reaction that is both normal and understandable.

We all wish we could jump in Doc Brown’s DeLorean and travel forward two weeks, two months, two years into the future and know with certainty that everything will be okay. But we of course cannot, and the uncertainty of not knowing the future is precisely why we plan.

Planning is about maximizing your happiness over the course of your lifetime and perhaps beyond your lifetime. But the nature of the human condition is not to think nor act in a way that focuses on the future. When we are scared, as we all are now, we react in an attempt to remove fear.

Historically and consistently, times of deep market downturns are followed by better-than-average market performance. While we all intellectually understand that stocks should be bought low and sold high, in times of great volatility, emotions predominate logic and, if left to our own fears, humans engage in emotionally satisfying yet illogical acts of selling stocks into a market downturn. While the reasons we do things like this are varied (stopping the pain, trying to capture a momentary upturn, selling the wrong stocks, following the herd), it is something that upon later, calmer reflection, you will almost assuredly regret.

This is why you hired your wealth advisor – to empathetically guide you in times of uncertainty. Investment performance is certainly important, but there are no investment decisions that can overcome ill-advised, ill-timed liquidation choices. You need your advisor, particularly in times like these, to be your biographer, mirror and problem solver. Your advisor needs to have a deep understanding of your story (needs, wants, wishes). Your advisor coaches you to keep in mind the long-term nature of your plan, and to remind you of the destructive results that emotionally driven short-term decisions could have on those long-term goals.

To avoid making mistakes, meet with your advisor.

My next posts will examine the reasons we behave the way we do in times of uncertainty, and the importance of building (or rebuilding) your plan in times like these.

ABOUT THE AUTHOR

Joe Maier

SVP Director Wealth Strategy JD, CPA | Johnson Financial Group

Joe has extensive experience helping high‐net worth individuals, family offices, business owners and corporate executives meet their wealth and legacy goals. His areas of specific interest and skill include business succession planning, financial and estate planning, and wealth transfer strategies.