Financial product vendors have responded with many packaged solutions such as annuity and high-yield investment products. Unfortunately, many times, these products impose increased expenses and reduced liquidity and flexibility.
Alternatively, some people choose to retain their current investment programs and use a systematic withdrawal approach. Unfortunately, many fail to understand the impacts of market volatility on their investments, the possible tax ramifications, and the care-and-feeding required to manage such a program, and thus find themselves short of income or depleting their investment nest egg more quickly than planned -- placing their future income stream at risk.
At Excel Financial, we follow a disciplined approach to income generation based on your goals, objectives, and time frames. In creating the strategy, we review key issues, such as the amount of income required and time periods, the sources of income and their reliability, the ability to tolerate risk and volatility, and liquidity requirements. Based on the answers to these and other questions, assets can be segmented and invested in vehicles appropriate for the designated purposes -- fixed, guaranteed vehicles where high reliability is required, and market-based vehicles to support ongoing growth to replenish the nest egg.
This asset allocation model is designed with a focus on the following goals:
If you are approaching that time when you will begin tapping into your investment nest egg, we can show you a tailored solution designed specifically to meet your needs.
An important and sometimes overlooked aspect of a prudent financial program is the management of risk. There are two basic strategies in any risk management program: management and transfer. Managing financial risk involves steps to help minimize the likelihood or impact of the occurrence of an identified risk. For example, this might entail establishing a fund to cover the business expenses for a defined time period in the event of the death of a partner. Transferring financial risk involves the use of vehicles (typically insurance) to fully or partially eliminate the risk item. In the example above, the purchase of life insurance could provide financial coverage for some or all of the projected business expenses in the event of the death of a partner.
During the financial planning process, we work with our clients to identify risk issues and management steps. Management steps are documented in the plan. With regard to insurance, while under-insuring can be a problem, so too can over-insuring or paying too much for a desired level of coverage. Therefore, the financial planning and review process includes an assessment of in-place insurance contracts and the determination of recommended additions, changes, or deletions. Clients may then work with their preferred life, health, and disability insurance carrier(s) to purchase required insurance products, or we will do the shopping for them from among many different carriers to identify the best options. The objective is to obtain the right amount of quality coverage at the lowest possible cost.
Insurance products can also be an important and effective tool in handling estate and related asset transfer issues. Again, this is addressed as part of the financial planning and review process.