Taking Control of your Financial Destiny Regardless of the Economy and Life’s Unexpected Twists


High net-worth baby boomers are discovering that a coordinated strategy is a powerful plan for a prosperous and secure future even when “life happens”  

The global economic turmoil has taught some cruel lessons. The most startling may be the realization that even the wealthiest among us are vulnerable to devastating losses if they lack a coordinated financial plan.

It may seem reassuring to have a “team” of advisors each of whom handles a different aspect of your portfolio.  But while some teams win the day, others rapidly self-destruct when faced with unforeseen calamities, sovereign debt debacles and rare Black Swan events that can be rationalized only after the fact — when it is too late to repair the fatal blow to your wealth.

There are various reasons why a team of advisors can stumble.  Chief among them is the lack of a designated leader, and too many separate conversations about the core issue — preserving your assets.  In this scenario you may rely heavily on the advisors you most trust, while ignoring the ones that have superior insight.  Also, conflicting advice causes analysis-paralysis, thus timely decisions are postponed or even forgotten.  Finally, the team may be mostly reactive and not proactive.

Compare the also-rans with the champions and you soon see the importance of coordination, cooperation and communication.  These three components are the hallmark of the kind of financial planning that truly secures wealth in any economic environment, says Ahmie E. Baum, managing director of UBS Financial Service Inc., heading the Baum Consulting Group (BCG) of Pittsburgh.

“If I say to someone that I want to talk about a financial plan, they’ll say they have one,” says Baum.  “Why?  Because they’ve got an investment planner, or they have an insurance plan or an estate, tax and debt plan.  But all these separate services are not an integrated plan or strategy.  Your retirement years can yield unexpected surprises and every baby boomer today is asking the same question: Will I have enough money to live a long and prosperous life despite pitfalls and unexpected events?”

Avoid These Blunders 

There are countless pitfalls to keep you up at night.  One common error is to assume you’re covered if you have an investment plan.  Wrong.  Investing is only one aspect of a truly comprehensive financial plan.

Another stumbling block is risk assessment.  Just because you can invest more aggressively doesn’t mean that you should.  If after reviewing your total financial picture you believe you are on the right track, skip the risky business and sleep easy.

A death in the family, not surprisingly, can wreak havoc.  Yet do we plan for it?    Consider the homemaker whose successful husband suddenly passes away.  She is left with a financial plan she doesn’t understand.  And though her estate plan is based on avoiding federal death taxes, it doesn’t address succession planning.  Thus, the surviving spouse is left with barely enough money to live on.

Baum, a CFP® with over thirty-two years of experience, describes the example of baby boomer couple Michael and Marie, who thought they were well prepared.  Michael, an engineer, had always been a good planner, and Marie, a nurse, carefully managed the household finances. Before they turned fifty, they wisely decided to create a financial plan that included pension and tax strategies, life insurance policies and estate instructions.

So what went wrong? Through the years, the boomers didn’t keep track of what they’d set up.  They were busy at work, and they believed that they had adequately addressed their financial homework.

Twenty years later Michael is retired and Marie is suffering from chronic health issues. Investment losses mean they are struggling to pay down their mortgage on their vacation home, and taxes are eating away at their income.  Marie is nearly seventy and yet cannot afford to retire.

The couple believed they had an air-tight strategy, when in fact they had a collection of plans that were not complimentary or far-sighted.  For example, their investment plan took into account their risk tolerance, and yet did not illuminate the various dangers that might weaken them in the future.  Their tax plan addressed annual savings but not future liabilities.  Finally, they had an estate plan, but long-term health care was never addressed.

According to Baum, Michael and Marie are typical baby boomers.  They earned excellent incomes, built a plan, lost track of their goals, and awakened only after they had squandered their greatest asset — time.

“You have several advisors, and each sees your situation from his or her own point of view, rather than focusing on the big picture.  This can result in unintended and harmful conflicts of interest and ruinous gaps in your safety net,” he says.

Great wealth presents an even greater challenge.  Managing massive sums actually creates a second business that requires constant vigilance and expertise.  Do you have time to run the business that made you rich while also overseeing the one that will protect you from that rare catastrophe — a Black Swan — or global melt down?

A Personal CFO  

When building a house, you don’t meet separately with the plumber, electrician and bricklayer. You engage an architect or general contractor to take command of all aspects of the project.  Why should your financial security be any different?

A top-notch financial planner is essentially a personal CFO.  He or she coordinates the entire process, managing all the moving pieces of your fiscal situation.  The result is a durable yet flexible mechanism that is comprehensive and effective because all critical decisions and potential outcomes are verifiable based on probability studies.

A CFO does not work for free, so beware of “free plan” offers.  Often they have a bias toward the product or service being sold.  An insurance agent’s plan will outline a solution that involves purchasing insurance.  An investment company will deliver a free plan that involves some form of an investment.  An estate planner’s fee plan will outline the drafting of legal documents at a cost.

That means if you are not paying a separate fee for planning you probably are not receiving objective advice.  And that could cost you dearly whenever the economy encounters heavy winds.

Contrast the hidden conflict of interest in the “free” plans with fee-based planning, which has no particular ax to grind and therefore eagerly embraces a multi-disciplinary approach.

The Power of Planning

The Baum Consulting Group of UBS Financial Services is a proponent of The Power of Planning, whether for wealth accumulation, wealth preservation and risk control, or wealth transfer.

The Baum Consulting Group operates under a fee-for-planning model and, as such, charges for its plans along with implementation because it has tremendous value on its own merits.

Baum and his team have developed a five-stage process that continuously evaluates all aspects of the financial picture — not just investments — to help manage cash flow for the rest of the client’s life.  Baum says the results can be profound.

“You become proactive, while everyone around you is overly reactive to every hiccup in the markets.  You also learn to make informed decisions regardless of economic conditions.  And you begin to feel a lot more confident about your financial future knowing that you have a prudent, comprehensive wealth management plan in place,” he says.

Baum’s The Power of Planning approach starts with an in-depth discussion about life goals, financial aspirations, and unique situations.  Future simulation determines risk tolerance, and simulates the future with “what if?” modeling tools.  Next is a comprehensive plan that manages every aspect of wealth through a wide range of market conditions.  Regular review and mid-course correction allows the planner to fine-tune and adjust to unexpected situations, including changing objectives.

“Anticipation, agility and periodic reviews are major factors in taking control of your financial future.  Life happens.  When it does, it is comforting to know that you’ve done everything you can to get through today so that you can savor tomorrow,” says Baum.

For more info about UBS Financial Services and the Baum Consulting Group, visit www.ubs.com/team/bcg; call 412-288-4800or 866-209-6128; e-mail Ahmie E. Baum at ahmie.baum@ubs.com.  Or write 500 Grant Street, 46th Floor, BNY Mellon Bank Center, Pittsburgh, PA 15219

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