Broker Check

How should affluent individuals protect their financial achievements and assure their long term goal

Personal risk management seemed relatively simple in the days when the worry was all about replacing income. The standard advice was to save enough to make it through an unexpected cash flow crisis and insure against long or permanent losses of income.

Today that leaves a lot out of the picture, including some conflicting goals, like . . .

  • Eliminating debts
  • Creating emergency funds
  • Building investment funds
  • Meeting major expense commitments
  • Assuring retirement income
  • Funding personal medical and elderly care
  • Funding parental elderly care
  • Settling transfer tax liabilities and creating a family legacy

Add to this the wide diversity of risk management and investment tools to achieve these goals-life insurance, disability insurance, medical insurance, critical illness insurance, long term care insurance, and a host of investment strategies and products. Sustaining your risk management plan and retirement plan requires dedicated and ongoing focus and the help of a team of professional resources.

Questions high-income families should ask to achieve financial control.

1. What planned or hypothetical events do you foresee that could create the most pressing cash needs? Can you quantify the financial impact?

2. In the future, what do you see as the most important financial decisions for you and your family? What is your time frame for making those decisions?

3. What have been the most important factors in achieving your quality of life goals for you and your family? What would happen to those quality of life goals if you or your spouse were to become disabled or die?

4. What age do you project for retirement? Are you aware that retirement assets could be subject to 70-80% tax erosion? If your experience in retirement demonstrates that you will not need to distribute all your retirement assets for income, would you preserve the tax-deferred growth for future generations?

5. What potential risks do you consider when evaluating investment opportunities? Ideally, what kinds of returns do you expect from a sound investment? What is your time horizon for achieving those returns? What do you consider the best and worst investment decisions you have made?