The Limitations of Transactional Planning and the Power of Continuous Attention

CLU, ChFC, AEP

Historically, planning for established families has been handled in a transactional manner. The family sees their attorney for estate documents, their insurance professional for policies and their investment advisor representatives for portfolio design. After each cycle is complete, the planning is perceived to be on auto-pilot, not requiring future attention, or at least not for a long time.

When families reach a certain level of wealth, addressing planning in cycles, with less attention between cycles, can cause unintended consequences. Just as attention to your affairs starts and stops, family dynamics and business growth are continuous. Life events such as marriage, births, deaths and the coming of age of heirs are key triggers – not just to initiate new planning, but to review what’s already in place for its current relevance.

In addition, planning that you’ve implemented can change even if you do not do anything to proactively cause change. As tax laws change and the economy expands and contracts, financial, insurance, legal and investment tools are impacted. Something you put in place a few years ago may not currently be operating in the manner you hoped.

Transactional planning is usually managed discipline by discipline, with each advisor designing and implementing strategies in accordance with their area of focus. When a family surpasses financial independence, the challenges of managing substantial wealth increase accordingly. Every decision and every strategy has a ripple effect into other areas of planning. In order to best leverage your assets, your planning and your time, it’s important to facilitate communication between all of your advisors and make sure each is aware of what the others are recommending.

Lastly, as wealth grows, a family’s vision or desires for the use of the wealth evolve as well. If you reviewed your past planning, including philanthropic allocations and decisions around children or grandchildren, are you confident your thinking would be the same today? We suggest having a solid strategy session with multiple advisors around the table to support you.

Ironically, when your mindset shifts from transactional planning to continuous planning, the decisions actually simplify. Where planning may have been stressful and cumbersome in the past, continuous planning increases clarity and therefore confidence. Decisions come easily and you make greater progress than in previous years. In turn, families tend to finally be able to relax about their affairs and tend to things they enjoy most in life.

As always, please feel free to call regarding this or any planning related question.