Financial Planning should be easy. I realize I'd probably be out of a job if it was, but like other similar professionals; attorneys, accountants etc., I've seen it get more complicated over the last twenty years so I don't think I have anything to fear. The simple fact of the matter is that the world doesn't stand still and the constant changes require constant readjustment to those changes. Now when we talk about these changes and variables in the financial world most people think about the markets. That's understandable, the stock markets change at least a little bit every day; it's the most noticeable part of our financial world. But in many ways, the movements of the stock markets at least in the short-term are just noise. The money you need to use in five, or ten or thirty years needs to be invested wisely - but today's gyrations aren't going to have a profound effect on that future dates' valuations. Keeping the market movements in perspective is a valuable mind-set, but one in which not making changes is typically the correct move. But there are other aspects of your financial life that can have just as great - or even greater- impact than the fluctuations of your investments and it's these issues that can actually require more diligence in addressing.

First there are those pesky laws. Most of us think about IRA's, 401K's and the other tax-qualified retirement plans as permanent pieces of the financial landscape, when in reality they are simply given to us by the Federal Government and therefore can be taken away. I don't believe they are going to be taken away, and they are so widely used and depended upon that they are unlikely to disappear - but they can be tweaked in ways that we may need to recon with. Just recently in their budget proposal the Obama administration suggested taxing the earnings inside 529 College Savings plans. Now this was not a tax that affected everyone, there were income thresholds you would have to meet with your total earnings before these plans would be taxed, but none the less it was part of the proposal. There was an outcry that saw this provision deleted from the budget proposal and it was very unlikely the current Congress would have allowed that provision to be passed into law anyway - but it does show that these tax-preferred plans may not always be as sacrosanct as we currently believe them to be. Let's face it - the only reason 529 Plans exist is for the tax free growth. The investment choices are limited and the fees can be slightly higher than you would see in a regular investment account, but tax-free earnings are a benefit that vastly exceeds those costs. In fact the outcry that caused this provision to be stripped from the proposal wasn't from individuals - it was from the states that administer these plans and get a portion of the management fees as state revenue.

When you hear politicians talk about reforming the tax code, generally you have some people who want to simply raise rates, while there are others that want to keep rates the same or even lower them, but at the same time they want to eliminate the "loop-holes" in the tax code. We all think about these loop-holes being things that other people use to avoid paying taxes. Weird legal arrangements like some corporations use to have their headquarters in a lower taxed country in name only while their operations remain in the United States. But very often these loop-holes they talk about are the deductions for IRA contributions, the tax-free growth in Roth IRA's, the aforementioned tax-free growth in 529 Plans, mortgage interest deductions and even the step-up in cost basis on inherited assets. This last point is another piece of the President's budget proposal that has not been walked back. Right now when you inherit assets the cost basis of those assets suddenly becomes the value on the date of death - or a date six months later. This means that the inherited stock your grandpa may have bought for $1 a share in 1960 that's now worth $1,000 share can be sold without a tax being owed - whereas if grandpa had sold the stock the day before he died he would have paid a capital gains tax on $999 per share. This new proposal allows the first $250,000 or so to pass this way, but eliminates the cost basis step up on assets inherited in excess of that amount. (Right now this is just a proposal, not the law.) I don't bring these things up to take a side on the political fence on these issues or to discuss if they are better or worse for our society as a whole. I bring them up because how you'll have to save in your IRA to fund your retirement, or if your Roth is sufficient to meet your future goals, or if that college fund your saving in every month will be enough to pay the tuition bill is determined as much by what the tax rates are going to be as by what the markets return. When these tax rules change, you need to change with them and keeping track of that is a big part of what we do for our clients.

But the big, bad government isn't the only factor besides the markets that will impact your financial life. The non-financial aspects of your life may be the single biggest factors. We can plan for a disability, an early death, or a long stretch of unemployment - and we do plan for those things - but let's not pretend that everything else stays the same around them. Retirements may need to be put off, long-term savings can become short-term savings and plans need to be altered. But then there are those other parts of your life that you can't insure against that also enter into the fray. Divorce is a biggie, most of us don't marry with pre-nuptial agreements and when the marriage doesn't work out all aspects of retirement planning need to change. Two people living together need less money than two people living apart - and then of course you can have remarriages, inheritances that were going to be jointly shared that are now redirected to just one spouse, even pension benefits that will change substantially. The other issue we've seen more and more over the past few years has been parents supporting their adult children - in many cases not the recently graduated Ben Braddock who doesn't know what he wants to do with his life - but children in their 30's, 40's and even 50's with families and mortgages who can't make ends meet. Very often these acts of generosity are negative financial moves for our clients - endangering their ability to maintain their lifestyles in retirement - but we love our children and we often will ignore our financial realities when faced with these emotional decisions.

While on the topic of emotions let's expand on that a little as well, because we don't make our financial decisions in a vacuum. All my retired clients who live on Cape Cod could have chosen to live somewhere less expensive, but the quality of life issue is just as important as the value of accounts. You may fall in love with a place, or a hobby, or a person that requires the total reworking of your financial plan. Usually there are trade-offs involved, yes you can take up hot air ballooning - but you're going to have to push back retirement. You can buy that house in Sanibel Island, but you're going to have to downsize your home in Osterville. It's possible these desires weren't part of your thinking when you first began planning for your future - but they become an indispensable part of what you want that future to be - as such the plans need to change.

I recently saw a "clickbait" ad on an internet webpage that read something like: This website will eliminate the need for costly financial advisors. I didn't click on it. But it did get me thinking about the technological world that we live in and how many professions were being replaced or radically changed by software. I used Uber for the first time a few weeks ago - it is better than using a cab - and cab drivers will need to shift their businesses to compensate. Retail stores are going out of business left and right as online shopping - even for things like groceries - grows every year.. Even when it comes to investing, you can find a website that will tell you how you should invest your money based on the markets. They use an algorithm to tell you how much should be in stocks vs. bond and international vs. domestic. But they can't help you with the other two-thirds of the equation. That you should use more of your IRA now and pay those taxes because your daughter who will inherit your money is in a higher tax bracket than you and would be better off inheriting your non-IRA assets. That you're better off saving more in your spouse's 401K rather than your own because their plan has better options for lower costs. That you probably shouldn't give your son that $10,000 he needs to pay off his credit cards until he can get a new job - but if you have to here's the best way for you to structure that gift. It's these decisions that often have more impact on your financial future than the exact percentage you invest in growth vs. value stocks. It's also these decisions that we help you make because we don't just see the dollars and cents, we also see what's important to you; what less than optimal financial decisions we need to talk you out of, and which ones we'd better not. I'm very proud of the service we've provided to our clients in this way over the last twenty years, and until the world stops changing I think we'll be able to add the same value to their lives over the next twenty. Please keep us in mind when speaking to your friends, family and colleagues.