Safeguarding Your Wealth Management Plan's Safe Landing

Safeguarding Your Wealth Management Plan's Safe Landing

January 31, 2022

As many of you know, I continue to put my Air Force pilot skills to work flying what I lovingly call Ullmann Airlines (Cirrus SR22T).  We periodically travel to meet our clients who live outside of northeast Florida. Recently, my colleague Pat Kilbane and I planned a visit to South Florida. The forecast for takeoff was low clouds and windy but the destination in Stuart, FL was to be clear skies and light winds upon our arrival. The airplane doesn’t care about the weather—it flies the same in blue skies as it does in clouds laced with rain or snow (it has instruments and ice protection).  For every trip, we plan our flight for what is forecast to happen and have a process for adjusting when events upend our pre-departure intentions.

On this flight, as we approached the airport, Palm Beach Approach Control (ATC) advised us that the weather at the airport was 100-foot cloud ceilings and ¼ mile in visibility. What? That was NOT supposed to happen. We set up for an instrument approach, descended to our minimum decent height (MDA) of 267 feet above the ground, with Pat looking through the windscreen to try to pick up the runway lights. We didn’t see the runway so what did we do?  We “rebalanced”—picked the nose of the airplane up, added power and executed a go around (a fancy term for going back out to try again). On our third try with no runway, I told Pat and ATC that I wanted a reroute to the closest airport with no clouds and blue skies. Luckily that airport happened to be close by in Vero Beach. I was getting tired, and it was time to put the plane on the ground and regroup.

This got me thinking about how safe flying is like what we do as Wealth Managers. Yes—we plan based on your values, goals, interests, assets, and cash flow.  We make assumptions for taxes, rates of return and longevity. These are the forecasts. We also make dynamic adjustments, oftentimes in conjunction with your other advisors (CPA, banker, insurance agent and attorney) when your personal situation changes. Going from being healthy, with a great career and family situation, to a serious illness, a change in the economy or job, or challenging family dynamics never feels good—we struggle with why this is happening to us. But just like our flight from Jacksonville to Stuart, we make thoughtful adjustments to your plan to keep you on track. In the airplane we use a checklist and precision instruments, driven by years of training and process. In your financial plan we use tax-loss harvesting, tilting portfolios towards those factors that historically have fueled performance (i.e., value, profitability, and small-cap companies), rebalancing to keep the allocation of equities to bonds consistent, and using certain alternative investments.  And in both cases, we don’t reinvent a process or let emotions derail our training.

What destroys airplanes and kills pilots generally involves two primary factors: pilot overconfidence and not sticking to known procedures. Why was the MDA in Stuart 267 feet?  Why did I have to go around at that altitude? Couldn’t I go to 200 feet to see if Pat could see the runway? The answer is simple. When descending at 500 feet per minute, we would have had less than 30 seconds to hit the ground—which is not enough time to safely get the airplane powered up and heading away from earth. The FAA, which certifies instrument approaches, has worked out the safety envelope and pilots who violate the parameters put themselves and their passengers in danger.

What destroys plans and financial goals?  Oftentimes it is believing that “I know better”. This one sector, or this one company will do better than a broadly diversified portfolio. That may or may not end up being true, but is it worth going below minimums to find out if you are right? Fads can make someone look very smart in the short run, but history shows that following a disciplined wealth management process such as ours keeps us from letting clients hit the ground in difficult conditions.  

We invest in the great companies of the world—some well-known and some of which you have never heard. When I started as an advisor, Amazon, Google and Netflix didn’t exist. In fact, we were still using paper maps in our cars (and planes) because Google Maps didn’t appear until 2005. And you certainly didn’t have it imbedded in your car technology until a decade later. The first iphone came in June 2009, the first commercial SpaceX launch in 2013, and the first Tesla supercharger the same year. The first fully autonomous Continuous Glucose Monitor (like the one I have which has returned my blood sugar to a non-diabetic level) is only four years old. And Zoom—although its first software was released in 2013, it was a global pandemic that turned it into a household word AND a necessary tool for business and personal survival and connectivity.

That’s what you own in your portfolios. Great companies today that will launch us into a constantly evolving future. The short-term fluctuation in valuations is insignificant especially if that volatility keeps you from owning the future intellectual progress that is accelerating everywhere. My life’s work is to make sure that our friends and clients keep their eyes focused firmly on the future while we do the work of flying your wealth management plane safely through occasional low clouds, ice, and turbulence. Those conditions cannot help but make us nervous and sometimes frightened, but when we arrive safely those feelings fade into the background of our lives.

If you have been around me recently, you know that I channel Ted Lasso (the wonderful Apple TV series) often and here is a gem from Season 1, Episode 10. His soccer team has just had a tough game. As head coach, Ted addresses them in the locker room:   

“Please do me this favor, will you? Lift your heads up and look around this locker room. Look at everybody else in here. And I want you to be grateful you’re going through this sad moment with all these other folks because, I promise you, there is something worse out there than being sad. And that is being alone and being sad. Ain’t no one in this room alone.”

I feel genuinely sorry for people who don’t have a team of high caliber, empathetic advisors surrounding them. Like Air Traffic Controllers, we are always available to put current events in perspective and to guide you in for a safe landing. Whether markets or personal situations are making you sad, or the opposite is true, you are never alone.