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Your entire life can change in a moment.
For my old neighbor, this moment was in February 2017. Most of the world will remember this day as the day that the Patriots came back from a 28-3 deficit to win the Super Bowl. My neighbor was a good man – he was kind, funny, and all-around enjoyable to be around. The father of 5 young boys at the time; the youngest was 3 months old and the eldest 10. It was on that Super Bowl Sunday that my friend was leisurely riding his bike around the neighborhood and was struck by an intoxicated driver. The driver fled the scene leaving my neighbor helpless in the street. After years of struggle post-accident, my neighbor was welcomed into heaven.
Your entire life can change in a moment.
In August 2020, I lost another friend, another neighbor. At that time, we were living in San Clemente in a neighborhood full of young families. It was a vibrant neighborhood – full of life and community. The kind of neighborhood where hanging out on beach chairs in the front yard was a regular occurrence. Our friends at the end of the cul-de-sac had a little boy the same age as our son at the time, and the mother was expecting their second. Her husband had an appointment that day to see the doctor, as his chest was bothering him. On that very summer day, as he walked over to converse with our other neighbor, a heart attack would take his life right there on our quiet little cul-de-sac.
Again, your entire life can change in a moment.
More than Heart Strings
I don’t share these stories to strike a certain chord with you or even intentionally evoke a particular emotion. I share these stories because they are real. They’ve had an impact on me and how I approach life and financial planning. These accounts are a reminder to all of us about the fragility of life.
One of my favorite finance writers, Morgan Housel, expands on this subject. He talks about how our perception of risk – derived from our experiences – impacts how we plan and invest. He specifically shares one of his own dark memories; growing up as a competitive skier, passing on an invitation from friends to do some out-of-bounds skiing, and learning later that evening that his two teenage friends were consumed by an avalanche during their outing.
The Shoemaker
These thoughts and memories are fresh in my mind, as I just attended a presentation with our risk department this week on disability insurance. I caught myself a little flat-footed in this meeting, as I was there to educate myself on services and coverage for our clients, but realized this is an area that I’m quite deficient in on my own plan. My co-workers can attest to this, I got a bit teary-eyed as I recalled these accounts that I noted above. I started to reflect on how an event like this would impact my family based on our current coverage.
Advisors love their clients; I love my clients. This leads me to go through their [my clients] portfolios and plans with a fine-tooth comb. The heart of an advisor is to organize, optimize, and leave no stone unturned. As an advisor, you realize that in this craft, it’s not “this or that” it’s “this AND that,” it’s the collection of small improvements and modifications that create meaningful long-term impact. Yet, the shoemaker’s children always go barefoot, right? It was this disability insurance meeting that put me face-to-face with that reality.
One of my colleagues, Don Saulic, stopped by my office after the meeting. He asked a really good question, “What’s the most valuable asset on your balance sheet?” Then he answered, “You are.” What a true and powerful statement. For my family, my income is a valuable resource – a resource we rely on and depend on.
Proverbs 27:1
Warren Buffett has said,
“The best thing you can do is to be exceptionally good at something, whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you. … So the best investment by far is anything that develops yourself, and it’s not taxed at all.”
We can all agree that there is plenty of truth that can be gleaned from Buffett’s statement here, but he is also wrong. These abilities can be taken away from you. In just a moment, your mobility or your life can be swept away. So, as unappealing as it may be to delve into some of these heavy topics, they are important.
You must protect your family, your income, and your balance sheet. Often this protection comes in the form of insurance, and good financial hygiene means that you are regularly “stress testing” your own financial plan to see what sort of “in a moment” event could be threatening to your plan. This is prudence; this is sound financial planning.
Being Vulnerable
So, as you can see, today’s discussion was a lecture I was giving myself. There is a place of vulnerability in my financial plan that needs to be addressed. Maybe your plan has some vulnerabilities and gaps, too. I encourage you to get a second pair of eyes on your plan and make sure everything is buttoned up and tidy.
Why? Because everything can change in a moment.
