Vice President of Wealth Management, Alec Knight, CFP
Alec Knight, CFPAt any given point in time, retiree confidence is an important measurement. People want to know that they will have the funds they need to live comfortably when it comes time to retire and that their healthcare needs will be met. In light of the current pandemic and accompanying economic downturn, retiree confidence has shifted.
However, though retirement confidence may fluctuate along with events of the world, it’s important to remember some of the key principles for achieving financial independence. To gain additional insight, we sat down with Brooks Financial Group's Vice President of Wealth Management, Alec Knight, CFP.
What is the relationship between retirement and long-term investing?
Alec: Fundamentally, it comes down to making sure you don’t outlive the money you worked so hard to save and also understanding that a lot of things can happen over the course of a person’s retirement that can negatively impact their investments and long term financial plan. The key is not worrying about the short term. Make sure you have a plan that focuses on the long- term picture, and that the allocation within your investments are in alignment with your plan and overall risk tolerance.
It is important to accurately assess the amount of risk that an individual is comfortable taking. Every investor has a certain amount of risk that he or she can handle. The issue is that it is difficult for people to ignore fear. The goal is to build a framework that allows human behavior to thrive in the context of how much risk investors are taking and how it impacts their financial plan. The strategy is not to beat human nature or time the markets. If individuals can invest within the bounds of how much risk they can handle and stay invested for the long run, they will not only do better, but anxiety will decrease as well.
When you work with a financial advisor, they should lead you through a process that accurately assess your tolerance for risk and helps keep you on track.
What are the key principles of long-term investing?
Alec: There are four key principles to long-term investing.
- First, embrace the power of compounding. It’s the force behind long-term wealth creation.
- Second, beware of inflation. It is the silent destroyer of wealth.
- Third, maintain discipline. You have to mind the investor behavior gap.
- Lastly, diversify. A globally-diversified portfolio fosters a more consistent journey.
The markets are volatile and we’re facing a recession. What should we focus on to reduce anxiety?
Alec: Build a holistic financial plan. There are two things that create financial anxiety – watching as events impact your money in a negative way, and fear of the unknown. The pandemic has delivered a perfect storm. That said, it is important not to react to short term market deviations. Markets will recover over time. Having a holistic plan in place alleviates anxiety and allows you to focus on what is in your control and ignore all of the other noise. The sooner you start planning, the better.
What steps can I take to secure my retirement?
Alec: Securing your retirement is not an event, it’s a process. Working with a professional financial advisor to build a plan that is customized to your matters of importance is key. Then, continually assessing the impact of things outside of our control and adjusting your plan as needed. To be successful, you also must manage yourself – being diligent in your savings while understanding what level of risk you are comfortable with and also the amount of risk you're willing to take to reach your goals.
What is the importance of your role at Brooks Financial Group, Inc.?
Alec: When it comes to retirement and all other elements of financial planning, the key ingredient is understanding completely the matters of importance of those in our care. From there we are able to render the servant leadership required to allow them to achieve their dreams. As Servant Leaders, we strive to put the talents and gifts of leadership into action for the benefit of our private client relationships. We embrace the needs and Matters of Importance of each relationship, while guiding their path, so that they might ultimately realize their dreams.
Learn more about retirement confidence in 2020 by reviewing details of "The Retirement Confidence Survey" conducted each year by the Employee Benefit Research Institute (EBRI).
Whether you're nearing retirement or just starting to plan, working with an experienced and knowledgeable team of fiduciaries is one of the best choices you can make to help ensure the plans for your future are realized. Take the first step today, by contacting Brooks Financial Group and scheduling a virtual introduction.