Everyone has a history of experiences that guide our decision making, including me. Sometimes we are very aware of how our past influences our decisions in the present, and sometimes it colors our thinking in ways in which we aren’t aware, creating blind spots. I became a financial advisor after experiencing the negative ramifications of those blind spots in our family business. After more than a decade as a financial advisor and CFP®, I’ve realized that managing money is both science and art. Many entrepreneurial pursuits are the marriage of the two, but I find that money in particular has an emotional component that is linked to our past experiences. This led me to me establishing my own financial practice and methodology, Fiscal Harmony™. It all starts with the SCORED process. The SCORED process is linear, because often our lives and our money are overlapping circles. Have you ever had a personal or financial challenge that caused a few other dominoes to tip or outright fall? By gaining clarity in our clients lives, work, and businesses, we can better help the families we serve navigate both the ups and the downs of life and money.

 

S – Your Story

Money is personal because it’s a tool to support your personal pursuits, your family, your aspirations, your goals. A great financial plan is unique to your life and circumstances. As an advisor, investing time to understand your personal story helps me build comprehensive and specific plans. You wouldn’t expect to rent Harry Potter and hear the opening music for Jaws. I can’t build your SCORE until I understand your story. It takes both science and human understanding to help my clients form long term successful financial plans and create Fiscal Harmony™. Your story is crucial to building your SCORE and may evolve in today’s rapidly changing environment.

• What is your story?
• How did your family experiences affect how you feel about money?
• Have you ever found yourself making a financial decision you regretted later?

C – Cash and Cash Flow

Cash and Cash Flow Cash and cash flow are linked and are mission critical step two. A recent Government of Accountability Office figures reflect that 45% of Americans don’t identify as employees. Some of our clients find their work life in motion from employment to contract as our world of work continues to evolve post-Covid. As disruption continues to define our economy, more “accidental” entrepreneurs will emerge. Evolving from employee to owner can be challenging. The focus of my financial practice is to build sound plans based on the needs of highly compensated individuals both as employees and business owners. Often, we find our clients move in and out of both roles multiple times over their work life, and helping them navigate and maximize those changes is key. I grew up in an entrepreneurial family and had both the privilege and pain to watch my family grow and lose successful businesses. Understanding your cash flow needs to develop the cash strategy is paramount. Cash is king when disruption happens because it allows you to make strategic, and often opportunistic decisions. Has economic or business disruption affected your family?

• Did you have the financial ability to pursue an opportunity that presented itself?

o – Opportunity

Opportunity Once we’ve invested our time in learning how each of our client’s unique stories affect cash and cash flow; it’s time to dig in. We design a financial “blueprint” that aligns to clients’ cash flow needs and timelines to build the investment strategy. Historically we’ve experienced how unscheduled life detours can happen, so flexibility is key. We consider how other income streams like Social Security, pensions, business ownership, stock compensation and real estate passive income can instruct each client’s investment design, just as it informs the cash flow analysis. Within the global investment strategy; the plan assigns each type of account a specific “task” to fulfill in the big picture as well as having its own specific investment goal. We’ve found that clients prefer and benefit from granularity in investment design.

R – Real Return

Not all returns or investment income are created equal. Early in our planning process, we invest time to understand the “net”. Salaries, business distributions, investment income and the like each have a unique footprint and specific place in the overall financial plan and strategy. We find that collaboration with client’s CPAs yields more customized solutions to meet each family’s needs. After cash flow analysis and during the opportunity phase of our planning, care is taken to consider:

• Where to maximize pre-tax, post-tax and tax free strategies?
• How will various investment strategies distribute gains and how will gains be taxed?
• Will tax free income benefit the overall strategy?
• How will longevity affect the long term plan?
• How could the need for additional health care affect cash flow and what is most efficient way to fund those needs?

Every family we serve is unique and taking the time to consider the larger picture as well as each component of the plan is key for success.

 

E – Easy Money

Easy Money There is an unlimited amount of easy money mistakes: too good to be true, fear of missing out, something sexy and exciting, tax avoidance schemes…you name it, I’ve heard it in my decade in the financial industry. All too often, the stories that follow are heartbreaking. In the 90s it was the euphoria of the limitless horizon of tech; more recently, it was the collapse of the exchange traded note market. “Bankrupt in just two weeks” appeared in the Wall Street Journal on June 1, 2020. The article followed hard working investors that added exchange-traded notes to their portfolios to “make up for lost time” in the financial crisis of 2008-2009 with disastrous results. The juicy yields lured investors as the market performed post crisis. The results of chasing high return strategies left many investors devastated as markets corrected.

• Have you ever found yourself tempted by the idea of easy money?
• Have you been distracted from or lost sight of your goal?

D – Developing intergenerational Wealth

Our greatest joy is serving families across generations. I was paid the highest compliment by one such family when the matriarch asked to go to lunch and discuss strategies to ensure the children were prepared to inherit the wealth they had painstakingly

accumulated and monitored. It is often a goal for parents to leave their children in a position of having economic stability for a variety of goals like funding grandchildren’s college educations, becoming debt free, starting a business. Money is an incredible lever that can leave meaningful legacies for those we hold most dear.

 

“Money is only a tool.  It will take you wherever you wish but it will not replace you as the driver.”

                                                               -Ayn Rand

 

Not having a plan can be like taking a road trip with no destination, GPS, or map. Having a plan and the right navigation tools means that you are far more likely to arrive at your intended destination. Establishing a plan gives investors a “lens” to help evaluate options that may or may not meet their long- term goals and needs. Having financial resources means you have options and choices. For me personally, it’s both options for my family, as well as the opportunity to pursue passion projects like influencing and mentoring business owners around the world and in my city. Business can be a platform for change that touches lives through generations. I learned that from my grandfather, Bud Salm. Are you ready to get SCORED?

• What’s your first step?
• How will investing your time to build your SCORED blueprint change your life and your family’s life?

Need some help?  More resources, articles, and tools can be found at www.fiscalharmony.com.