One Size Fits None

 

Jeff Martin is a financial advisor at Cornerstone based in Reno, NV. Jeff has earned the Life and Health Insurance Licensure and has passed the Series 65 examination. He enjoys being able to help clients create customized strategies for their portfolios based on their unique financial goals.

 

ONE SIZE FITS NONE

I can’t speak for others, but nearly every time I have tried a one size fits all item, I seem to be the exception to the rule or left underwhelmed. This has been the case with hats, bags, adjustable belts, tools, etc. Now I could be the anomaly, but this becomes exceedingly less likely the more times I end up with the same result. The same could be said for financial planning.

 

There are several “rules of thumb,” universal advice and practices when it comes to financial planning. Some examples would be to establish your emergency savings, avoid bad debt, diversify your portfolio, and don’t take more risk in your portfolio than what you are comfortable with or can afford to lose. All of which are sound advice. 

Where the divergence from “standard” to individualized begins, is with the realization that each situation is as unique as a fingerprint. For some, their financial priority may be growth, while others prioritize preservation. Some may wish to maximize income by spending down assets, and others strive to leave a legacy. This being the case, a strategy that may make sense in one certain scenario, likely isn’t applicable, or possible completely contradict one’s priorities in another. 

For instance, assume an individual has determined their priority is preservation of assets, and maximizing income, but they have positioned their portfolio in an extremely risky way, and could potentially see a loss of 75% of their assets. From the start, this individual is grabbing a hammer to screw in nails. It’s just not going to work well. 

To be clear, I am not saying that universal advice is bad advice, but to increase your odds of having a successful financial plan, you need to take it a few steps further. This begins with each individual or couple determining what is at the top of their priority list, and what components are less of a concern, or not a concern at all. Based on these results, it’s possible to find your unique approach could even go against some of the universal advice. 

For example, the standard rule of thumb when it comes to emergency savings will almost always fall somewhere between 3-12 months of living expenses. Check. This is a good place to start, but it may not make sense in YOUR situation. I have countless clients that have trouble sleeping if they do not have substantially more in their savings above and beyond the “standard” and this works for them. On the other side of the coin, some find themselves completely comfortable with a leaner than recommended savings, and this too, works for them. 

I leave you with the encouragement of not disregarding universal financial advice but differentiate the fact that just because “it worked for someone else” it will work for you. Unless your situation, goals, priorities, and every other component are exactly the same as the other’s whose strategy you are copying, you will likely end up with a different outcome.   


Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.