Don’t Skip Your Fall Financial Check-Up
male medicine doctor hand holding stethoscope head closeup in front of his chest.

Don’t Skip Your Fall Financial Check-Up

As the only male living in a household with four women (well, except for Louie, our French Bulldog), I am occasionally subjected to someone rolling their eyes and just saying the word “men.”  It happened again this last Thursday when my wife, Jill, and I were having a cup of coffee together, talking about what we each had going on for the day. I told her about an upcoming television interview I was going to do for NECN that day, about the importance of doing fall financial check-ups. Jill, with her cat-like reflexes, pounced at the opportunity to remind me for the 3rd or 4th time to schedule my annual physical with Dr. Hannah. She said she knows guys don’t generally like going to the doctor – and she’s right.  In my own experience, most men don’t go to the doctor unless they’re experiencing symptoms, or perhaps for a trip to urgent care in some cases. And you know, as much as I hate to concede to my lovely bride . . . sometimes she is right.  

You know, as I sat in my office preparing for my NECN interview that morning, Jill got me thinking. I got thinking about the parallels between our physical health and our financial health. You see, when it comes to our financial health, we often fail to take preventative steps that can head off problems later on. It’s too easy to fall into the trap of only taking action when there is a problem. This year, more than ever should be a reminder to people that we need to have the discipline to do systematic check-ups to our financial plans. COVID is having dramatic effects on the economy, creating turmoil in the financial markets, and sending unemployment numbers to all-time highs. Also, we are in a presidential election year.  Whether the Republicans or Democrats prevail, not only for the president but also for congress, it will impact fiscal policies, such as how we are taxed and how we spend, which should flood into the financial markets. We need to keep an eye on the outcome and how it may require course corrections in our financial plans.

Very few of us haven’t felt the impact of COVID. For some it’s meant job loss, significant income decline, or worse yet, the illness or death of a close friend or loved one. It certainly seems that COVID will remain on the scene for the near term, creating drag and uncertainty about the future of the economy. Just like diet and exercise can strengthen our physical health, there may be moves within your financial plan that can create some protection.

Probably the biggest benefit of doing a fall financial check-up is the emotional peace of mind it gives us.  We don’t want to be like the guy at home suffering some sort of physical health symptom, hoping it will go away or furiously searching the internet trying to diagnose and treat himself, right? Nope . . . not you.  Not the Cutter Family Finance faithful.

Now is a good time to take action to make sure you understand your four pillars of investment success: a risk-budget built within your system, allocation of assets to the risk-budget, downside risk mitigation techniques, and potential outcomes of both market uptrends, and more importantly market downtrends. Now would be a good time to address any necessary and reasonable adjustments to lower any anxiety that may be instilled into your plan.  Not understanding your four pillars of investment success is typically not a good idea, especially if you are approaching or are currently in your distribution years.  Folks, this is because we become extremely emotional, and it can lead to the very common mistake of you over-reacting. 

Look, when the markets tumbled at the onset of COVID in March, nearly 20% of people in the stock markets completely sold out of stocks due to fear, not due to a sound financial system. This is important to understand because as the markets have rebounded over the past several months, those who reacted out of fear with no financial systems in place have essentially locked in their losses. Folks, this is the classic retail investing process that has led to financial folly for so many years.  

Understanding your risk budget, maintaining diversification in your portfolio, rebalancing to your risk budget and having a downside risk mitigation system in place before the symptoms arise is of critical importance.  Just as it’s important to eat right and get exercise for your physical health, you need to manage the four pillars of financial success for your financial health. But, we still need to head into the doctor’s office to get our cholesterol checked on a regular basis and review our prescriptions.

Just because we are living in crazy and uncertain times doesn’t mean we are powerless in the face of them. The more we do to address financial issues before they arise, the better our overall emotional state of being when the issues arise . . . and I assure you, they will arise.   

When I go see Dr. Hannah, I trust the guy right?  The guy is looking out for my best interest.  Heck, I want someone I can trust and confide in. I certainly don’t want to look over at my physician while he is trying to read my medical chart upside down. Nope, not me!  

The same goes for a retirement specialist. You want someone who you can develop trust and a rapport with.  If you have a good doctor, they are going to help you avoid many of the downside risks to your physical health. And a good retirement specialist is going to help you manage the downside risks of your financial health. In both cases, if you take care of the downside risks, the upside usually takes care of itself.  And yes, my next check-up with Dr. Hannah is scheduled.

Finally, today is a special day, September 11th.  While our flags are at half mast, let’s take a moment to bow our heads and to remember that day and all the people affected in so many ways.  Let’s pray that our governmental officials do everything they can to protect us.  Let us never forget.

You must always be vigilant and stay alert, because you deserve more!

Have a great week.

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, Mansfield & Southlake, TX. Jeff can be reached at jeff@cutterfinancialgroup.com.

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