How Your Advisor Can Build a Plan Based on Your Values

Your financial plan should have the same philosophy as the rest of your life. Your values—or what matters most to you—drive every decision you make in life, including the hobbies or activities you participate in, the causes you support and the people you spend your time with. Your financial plan should be driven by the same factors. An advisor should never recommend a product, strategy or service before knowing what you want to accomplish. So, let’s look at the ways an advisor can build a financial plan based on your values, throughout different areas of financial planning.

1. Defining your values and goals.

When developing a financial plan, you should avoid making decisions solely based on instinct, gut feeling or simply rolling the dice. An advisor helps discover what goals are most important to you and then designs your financial plan based on evidence. Maybe you don’t know what you hope to achieve with your assets quite yet, but you value simplicity. An independent wealth advisor can simplify your plan by recommending only what you need to grow and protect your assets—not a product, strategy or service you don’t need. Or you may seek an advisor to manage your plan so you can focus on activities and people you value most. When making investing decisions, it’s easy to get caught up in topics that elicit exciting headlines and rumors about quick ways to get rich. Your advisor can also help you filter what’s important and what’s not about your financial plan.

2. Guiding your investing strategy to align with your values and goals.

Focusing on goals: Your advisor helps your investments work toward what’s most important to you by finding the right asset allocation, risk tolerance and asset classes so you can accomplish your goals. Remember, your benchmark isn’t the S&P 500, the Dow Jones or the Nasdaq. Your benchmark is your goals.

Minimizing investing costs: It’s hard to think of any situation where you’d want to pay more than you need to. This is especially true when it comes to investments. Data shows that fees, expenses and taxes can be the biggest drag on investment returns. An advisor will look for the most cost-efficient funds so that you keep more of what you make.

Making decisions based on evidence: It’s normal to get excited about a hot new stock or product that everyone is talking about. But the investing universe is full of fads that die just as quickly as they come. That’s why it’s important to build your portfolio with investments that have a history of consistent returns.

Allocating to causes you’re passionate about: There are funds that support social causes, religious values or other lifestyle values, including environmental, social and governance (ESG) funds. If ESG is something that interests you, it’s important to talk with a professional about the added risks that come with screening out specific companies or industries. With fewer companies to invest in, you’re reducing your options for diversification. An advisor can help you make the best choice for your investment portfolio while maximizing the impact you’re making.

3. Suggesting strategies to make the biggest impact with your money.

A trustworthy financial advisor will not only ensure you give to charities or family members in the most tax-efficient way, but they’ll also make sure your gifting strategy is in line with your overall goals and values. This could mean finding the best way to contribute to a donor advised fund, or determining whether you should give cash, or funds, from your IRA by making qualified charitable deductions (if you’re over age 70.5). Or maybe you want to give money to loved ones but aren’t sure about the rules around gifting.

An advisor will help you navigate rules for transferring different types of assets to individuals or entities. If you want to distribute assets during your lifetime, an advisor (along with your accountant) can help you find the best way to distribute them. For example, if you hold stocks with large gains, it might make sense to transfer these to a charity or tax-exempt organization because they’ll pay no taxes on the gains. If you have income-producing assets, your advisor can help you transfer these to loved ones who are in low-income brackets.

4. Ensuring your values are built into your estate planning.

Estate planning is how you decide who will receive your assets, what assets will be passed on, and how. Regardless of their values, most people want to have a say in this. An advisor can work with your estate planning attorney to make sure your assets are in line with your estate plan (or help you find an attorney).

When it comes to selecting beneficiaries and factoring in your charitable wishes, your advisor can work with your estate planning attorney to make sure your assets are set up according to your estate plan. This might mean that you plan to give taxable assets to children so they can take advantage of the step-up in basis, which reduces their taxes on the inheritance. And you could give pre-tax assets directly to charities, so your heirs don’t pay taxes on the distributions.

5. Prioritizing your values-based goals in retirement.

Maybe you value simply having enough money for retirement. An advisor can help you contribute to the right accounts, determine whether you should take a pension buyout, decide when to draw Social Security, and figure out which accounts to draw from in retirement. An advisor can also help you figure out how long you need to work or if you have enough savings to cut back to part time. If you own a business, an advisor can strategize your succession plan. Data shows that you spend a certain amount of your savings on leisure activities until a certain age, at which point health care becomes your main expense. Your advisor can develop a spending plan so you can prioritize doing what you love while maintaining peace of mind that you’ll have enough ready for future medical bills.

Advisors are resourceful, and their true employer is the client. Your advisor works for you. So, take advantage of the resources that advisors have access to, and align your financial plan with whatever is most valuable to you! If you are not working with a Buckingham advisor, we would love to help you. Please schedule a phone call or virtual conversation with our Client Development team.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain data may be based off third-party data and may become outdated or otherwise superseded without notice. Third-party information is deemed reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.