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What Does Traveling Have in Common with Wealth Management?   Thumbnail

What Does Traveling Have in Common with Wealth Management?

Investing Financial Planning Retirement Planning Income Planning

A 90-second read by Anthony Benante:  Do you have any summer travel plans? What does traveling have in common with wealth management?  Maybe more than you think.  We thought we would have some fun drawing analogies from the top travel tips listed in Julie Hall’s article in the AAA Newsroom online publication:

Do your research

AAA Travel Tip – To make the most of your trip, map out your route in advance, using a tool like AAA’s TripTik Travel Planner. For extra guidance, seek the advice of a knowledgeable travel agent. And be sure to download the AAA Mobile app to find AAA Diamond Rated hotels and restaurants, gas prices and fun stops along the way.

Wealth Management Analogy - Research how different advisors work.  Do you know the difference between advisors who work on commission and dual-registered advisors (who can charge both commissions and fees) and fee-only advisors?  Does the advisor work as a fiduciary to you?  At Baron we work as a fee-only advisor who is also a fiduciary to you.  Our only compensation comes from our clients, eliminating outside influences.  We sign a fiduciary oath for each client stating we place our client's interests ahead of our own.

Be prepared

AAA Travel Tip– For passengers, pack books, games, or music for the ride, and a pillow. Bring information on your destination to keep kids and other passengers entertained. Pack healthy snacks for kids, especially if you can’t stop for a full meal while traveling.

Wealth Management Analogy - Gather all of your financial information for review including items such as account statements, insurance policies and estate planning documents.  Work with your advisor to understand your investment experience and expectations.  Outline your specific financial goals and objectives to determine a plan that includes a risk-appropriate investment strategy and how your resources invested in that strategy will help achieve the stated goals and objectives.  An effective plan will be one that you can stick with in all economic environments.

Safety first

AAA Travel Tip – Drivers should plan frequent stops, about every 100 miles or two hours, to remain alert. Make sure everyone is restrained by seat belts or a child safety seat to prevent injury in case of a sudden stop, swerve or crash. AAA members who are renting a car can request a complimentary infant car seat or toddler booster seat.

Wealth Management Analogy - Once you are invested in a risk-appropriate strategy that helps meet your financial goals and objectives, regularly stop to review the performance of your investments.  Verify the quality of investments by comparing performance to benchmarks and peer investments.  Make changes as needed.  Rebalance the portfolio when the weighting of investments is outside of a stated range outlined in your Investment Policy Statement.

Pack your patience

AAA Travel Tip – Be prepared for busy roads and long airport security lines throughout the summer. If hitting the road during a holiday weekend, consider leaving earlier or later than the typical holiday travel times to avoid heavy traffic. Same goes for air travel, and be sure to arrive at the airport at least two hours before scheduled take-off.

Wealth Management Analogy - Keep emotions intact and avoid behavioral mistakes.  Unfortunately, markets do not go straight up.  Many people are too overconfident when markets are positive and too pessimistic when markets are experiencing negative performance. Don’t lose your patience.  Have a plan ahead of time, so that when downside volatility occurs you know what actions to take.  A risk-appropriate strategy should keep you invested during volatile times and rebalance when needed.  Note that if you use your investment assets to meet lifestyle needs, a cash cushion should be part of your investment strategy.

Be road-trip ready 

AAA Travel Tip – Take your vehicle to a trusted repair facility to perform any needed maintenance before heading out on a road trip. In case of an emergency, always carry a flashlight, extra batteries, warning devices such as flares or reflective triangles, jumper cables, a first-aid kit and extra water. To locate a AAA Approved Auto Repair shop in your area, visit aaa.com/AutoRepair

Wealth Management Analogy - Regularly meet with your advisor to review your financial plan progress and provide updates as needed.  If something is not going as planned or you can see trouble down the road, it’s better to know your options as soon as possible.  At Baron, we call this a "feedback loop" and feel it is an extremely important part of working towards achieving the success projected in your plan.

Whether you are planning to travel or planning for retirement, determining an appropriate strategy ahead of time will provide guidance for a path to success and for actions to take when things might not go as smoothly as expected.

Do your research – Work with a fiduciary who puts your interest first.

Be prepared– Have a comprehensive plan that is based on your profile.

Safety first– Monitor investments and rebalance when needed.

Pack your patience – Keep emotions intact and avoid behavioral mistakes.

Be road-trip ready – Review progress and update your plan as necessary.

You can see how nicely these analogies fit to our basic tenets of investing: Create a globally-diversified and risk-appropriate strategy.  Validate the investment choices versus peer investments.  Rebalance when needed. Test the strategy in a comprehensive financial plan and have regular feedback loops to update information.

If the analogies listed sound interesting and important and if you want to learn more…ask us.