The COVID-19 pandemic that began in March shows no sign of stopping. Everyone is hopeful that there will be a vaccine soon, but as of this writing caseloads across the country continue to rise. The pandemic has affected the lives of everyone in Lakewood, CO, and surrounding areas, with curtailed or shutdown businesses, closed schools, and more. 

But should it affect your financial planning?

The Pandemic Underscores the Importance of a Financial Plan

Yes. In fact, the pandemic underscores how important it is to have a financial plan. It’s important as never before to know where your money is, what your accounts are doing, and what your financial position is, both short and long term.

Let’s discuss ways to get your financial life balanced. Contact The Normandy Group today!

It also underscores the dynamics of financial plans. The fact is, financial plans can change over time, and often do. One primary reason is that financial plans are inextricably linked to goals — and your goals will likely change as the years go by.

But goals are hardly the only factors that change. Your financial position is likely to change over the decades as well, as will your personal life. It’s always important to have a plan — but that doesn’t mean a rigid set of dictates. It means periodically reviewing the elements of a comprehensive financial plan with trusted financial advisors such as a CERTIFIED FINANCIAL PLANNER™ Professional and/or a Certified Estate Planner™.

Most comprehensive financial plans typically include the following elements:

• A budget itemizing your income and expenses
• An investment portfolio
• A retirement portfolio
• College savings plans
• Risk management strategies 
• An estate plan, including a will or trust(s) and financial and medical powers of attorney

At The Normandy Group, our Dynamic Wealth Design is a strategically-tailored plan which can secure your family’s future.  Envision a plan that lives and breathes, one that is as dynamic as you.

Now, let’s look at how the pandemic affects each of the elements listed above.

Your Income and Expenses

Many people throughout the country have been hard hit financially by COVID-19, losing jobs and businesses — often without any clear sense of when or if they’ll return. 

Whether that applies to you or not, review your budget to make sure you are living within your means — no matter your income or net worth. The pandemic has made that even more crucial, not less so.

If the pandemic has reduced or softened your income, take appropriate steps. Here’s where an active spreadsheet of your expenses pays off. Review them to prioritize what’s necessary and reduce or eliminate what’s not.

Some sectors, such as online conferencing, have benefited from the pandemic. If you work or own a business in a sector that the pandemic has positively affected, review your plans for your income and growth. For example, should you devote more to emergency savings? The pandemic has highlighted how important it is to have a cushion in case of unexpected events. 

Investment and Retirement Portfolios

It’s also time to review both your investment and retirement portfolios. Are you still comfortable with the asset allocation? Have your goals, such as when you want to retire, changed? 

It’s also prudent to review individual stocks. Some sectors, like travel and airlines, are reeling from the pandemic. Do you need to revise your sector weightings? Over time, stocks are more likely to recover — but not if individual companies have to cease operations or go into bankruptcy entirely. 

At the same time, it’s important not to make any fear-driven changes in your portfolio. After an initial plunge this Spring, the stock market has seen some gains. Stocks are ultimately driven by earnings, and earnings are driven by sales and demand. Eventually, demand should return, even in the hardest-hit sectors.

The economic slowdown occasioned by the pandemic has also affected bonds and cash. Interest rates, already at historically low levels, aren’t keeping pace with inflation. That’s also not likely to change in the short term. You may want to consider re-evaluating any bond and cash holdings.

College Savings

If you have 529 plans for children or grandchildren, re-evaluate them in light of your needs during the pandemic. A few factors to consider include:

• your ability to keep contributing 
• any changes in your children’s higher education plans due to travel restrictions or online course provisions 
• any long-term plan changes for higher education itself

Risk Management Strategies

There are four common strategies to mitigate risk.  These risk management strategies include:

• Avoidance
• Transfer
• Reduce
• Retain

Purchasing insurance is one strategy of risk management.  This method transfers the risk to an insurance company. Insuring your assets, such as a house and car, is fairly straight forward.  Life, disability, and long-term care insurance can be a little more complicated, in that you must be insurable, and you will need to quantify the amount of coverage required to meet your insurance portfolio objectives.  

As many families have sadly found, a lack of adequate insurance coverage can have profoundly negative effects on a family if a major breadwinner dies or is disabled. Review your insurance policies with a CERTIFIED FINANCIAL PLANNER™ Professional and/or Certified Estate Planner™ to make sure you have enough coverage. 

Estate Plans

There are no two ways about it: the pandemic has also illustrated how fragile life can be. Even the young and healthy can catch a potentially life-threatening disease. While no one likes to discuss it, COVID is a reminder that illness, incapacitation, and death can occur suddenly and with almost no warning.

If you don’t currently have an estate plan, work with a legal professional to define your estate planning goals. An essential goal of an estate plan is to ensure that your assets are bequeathed to the family, friends, and/or institutions in the manner you wish. 

If you become ill or incapacitated powers of attorney can allow a designated person to make decisions on your behalf. A financial power of attorney appoints an individual(s) to gain access to your finances and make financial decisions for you.  A medical power of attorney appoints an individual(s) to make medical decisions in the case you are not able to do so yourself.

All these features of an estate plan are highly important; the pandemic emphasizes this importance. 

A Word About Choosing a Financial Advisor

When choosing a financial advisor, you may want to consider focusing on working with a CERTIFIED FINANCIAL PLANNER™ Professional and/or a Certified Estate Planner™. 

CERTIFIED FINANCIAL PLANNER™ Professionals, are fiduciaries who must always put your financial well-being above their own.  The CERTIFIED FINANCIAL PLANNER™ Professionals and Certified Estate Planners™ at The Normandy Group offer serious financial planning for today’s complex world.  By combining tax, financial, and estate planning strategies we can help you achieve your goals. Contact us today for a complimentary consultation.

Download our free eBook “6 Simple Steps to a More Confident Retirement”: