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Reflect, Reassess and Realign: Checking in on Your Financial Plan

Marcus by Goldman Sachs is excited to share this insight from our friends at 
Goldman Sachs Personal Financial Management

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By Kathleen Grace, Vice President, Goldman Sachs Personal Financial Management

The COVID-19 pandemic and ensuing economic “shutdown” have provided us with the opportunity to reflect on what is most important in life, reassess priorities and goals, and realign our financial plan with our core values and beliefs.

As people think more seriously about their direction in life, they’re not just focusing on whether their estate plan is in order but also on the bigger picture – that is, if they have done the things that are truly important to them.

For some people, this may mean building close relationships with family members, living a life we can feel proud of, improving the lives of others, or leaving a lasting legacy for our loved ones.

If this self-actualization period seems overly challenging, consider that a client’s teenage daughter voluntarily decided to teach herself to play the guitar during quarantine, instead of binging on Netflix or social media. If you’re raising teenagers, then you know this is no small undertaking!

Why should this anecdote inspire us? Because it illustrates the power of setting goals and working little by little each day to reach them.

If you can envision yourself making small accomplishments weekly while knowing that each step is bringing you closer to living your “best life,” this can help keep you motivated as you set aside the time needed to work on you.

Once you’re able to clearly articulate what it is you truly desire, you can then begin to build your life around those goals, using the time we have (now and in the future) more wisely.

This approach is what Joe Duran, head of Goldman Sachs Personal Financial Management (GS PFM), called “financial life management,” where your financial advisor takes a comprehensive look at various aspects of your life (financial and non-financial) to understand how they may impact your overall financial plan and well-being.

Now is a great time to work on getting your financial life on track – to reflect on what is most important, reassess priorities and realign financial goals and decisions with your core values and beliefs.

Reflecting on what you want out of life

Time in solitude can help us all gain perspective, allowing us to think about what truly makes us happy, what really matters and more importantly, what is within our control.

This self-reflection may start with some basic questions such as:

  • What does a good life mean to me?
  • Do my commitments match my goals?
  • How did I lose focus on the things that really matter?
  • Is my life running me or am I running it?
  • Will my loved ones be OK if I’m not here?

When working to improve our financial lives, not only is it critical to understand what matters most to us but also what drives our money decisions and where we may need the proverbial “lane assist” to keep us on course, heading toward our desired results.

In general, GS PFM has identified three biases that drive our decisions when it comes to finances: fear, happiness, and commitment. One or a combination of these biases can come into play when we’re making financial decisions.

This is why it’s important to first take an honest self-assessment (see our MoneyMind® tool) in order to understand the specific emotions or biases that may cause us to drift away from our financial goals. Because while emotions can help provide the wind for our sailboat, they should not direct the path.

Risk of emotional decision-making

We don’t always recognize when emotions are overruling our rational thought process, and at times the results can be disastrous! As humans, we rationalize (or use logic to justify) the emotional decision and convince ourselves into believing it is a reasonable one.

In one general example, in the recent market and economic turmoil, some investors allowed fear to drive them to sell in a panic or drastically deviate from original the goals and objectives the portfolio was crafted to achieve.

Certain courses of action sometimes require us to act counterintuitively, such as choosing to stay the course or perhaps rebalancing the portfolio during periods of large market declines. These decisions can be difficult to make when emotions are in control.

Reassessing priorities and goals

One great assessment tool that we use at Goldman Sachs Personal Financial Management to uncover what drives our clients’ financial decisions is Honest Conversations®. This set of cards facilitate open and frank discussions about money decisions and other priorities in life.

Once we identify the factors, we can then begin to break down that seemingly monumental financial to-do list into achievable tasks by recognizing the psychological factors that may be unintentionally keeping you from a better financial future.

If you’re single, married or otherwise sharing your financial life with someone, consider using this tool to help you and your partner determine and prioritize what you value most in your lives. Understanding how you and your financial partner make decisions is critical to successful communication.

The great news is that once you have taken an honest inventory and assessment, you’ll have the clarity to focus on those things that matter most and develop a realistic approach to accomplishing those goals. For instance, you may want to start by comparing your current personal situation against the list of goals you’ve identified.

Once you know where you’re starting from and where you want to go, you can then work with your financial advisor to come up with a plan to reach those goals – similar to that of a pilot having a flight plan before takeoff.

Realigning priorities with core values and beliefs

There is a feeling of joy that comes from bringing your life purpose in line with your core values and beliefs. Some goals may require a bit of effort to achieve and involve tradeoffs – working to improve our financial lives always require some sacrifices.

This is another area of discussion you can have with your financial advisor, who can work with you to identify and understand the tradeoffs that would be necessary to accomplishing your goals.

Financial decisions can either move us toward or away from our ideal persona. If our actions are not aligned with our core belief system – then other parts of our lives may suffer. For example, I discovered that a couple of my personal Honest Conversations® priorities were not being met, including:

  • Spending time with people I care about. Often I would lose track of time while at work and return home to my daughter later than I planned. I was constantly feeling guilty. So I started with small changes, like scheduling time to attend a recital or a lacrosse game.
  • Not being a burden to my family. I worry about being a burden to my family should I become ill, so to help alleviate this concern, I purchased a long-term care policy.

Creating a priority action list in collaboration with your financial advisor is an important first step toward bringing your goals and dreams in line with your core values and beliefs. Implementing small, measurable changes brings you closer to accomplishing what is most important to you and your family.

Everyone’s priority list is going to look different given that it’s based on your own particular worries and needs. And as a result, outcomes will differ from person to person as well.

The successes along the way can provide the motivation needed to continue these daily psychological habits – which, when consistently incorporated into your life, can have a positive impact on your finances and your sense of well-being.

Developing new habits isn’t always easy, which is why having a trusted advisor to provide you with inspiration and guidance is critical for continued success. As with any good-behavior pattern, in a short time and with consistency, these positive patterns will become a regular part of your everyday decision-making process.

The bottom line

It is important to know that sometimes we don’t have all the tools, facts and data available to make a rational decision.

This is when it is important to seek guidance from a seasoned financial advisor to provide perspective when our emotions may be leading us astray and to provide actionable solutions that help you arrive at an outcome in line with your ultimate goals and objectives.

United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC (“GS&Co.”) and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization. Advisory services are offered through United Capital Financial Advisers, LLC and brokerage services are offered through GS& Co., member FINRA/SIPC.

GS PFM makes recommendations based on the specific needs and circumstances of each client. Clients should carefully consider their own investment objectives and never rely on any single chart, graph, or marketing piece to make decisions. Investing involves risk, and investments may lose value. There are no investment strategies that guarantee a profit or protect against loss.

GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances.

The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. The material is based upon information which we consider reliable, but we do not represent that such information is accurate or complete, and it should not be relied upon as such. The information, data, analyses, and opinions contained herein include confidential and proprietary portfolio information of GS PFM, may not be copied or redistributed for noncommercial or personal purpose without GS PFM’s expressed permission.

All names, logos, and slogans identifying GS PFM or GS PFM’s products and services (including, without limitation, HonestConversations®, MoneyMind®, FinLife®, Financial Control Scorecard®, Live Richly., We Help You Live Richly., Helping People Live Richly®, One Best Financial Life®, Ideal Life Index®, GuideCenter®, InvestmentViewfinder., GS PFM Financial Life Management®, and Financial Years of Freedom.) are trademarks and service marks or registered trademarks and service marks of GS PFM or its affiliates in the United States and/or other countries.

Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA, which is an affiliate of United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management.