confident woman in sun glasses

Its not what your portfolio is worth, its whether or not you have what you need

Working to improve women’s confidence in their finances is one of the goals of  To that end, any insights on what confidence is and how to improve it gets my attention.  This year’s Special Report, 2020 Investor Research written by Julie Littlechild for the Investments & Wealth Institute, made a very astute insight for advisors about the financial confidence of their clients.  The report states that “Confidence is not only a reflection of what is happening in the markets and the value of our portfolios.  It is about a sense of control, clients’ belief in their own abilities, and the clarity of the clients’ plan.   Rather than looking at ‘confidence,’ it may be more important to look at ‘self-confidence’”.   A sense of control, belief in your ability, and clarity of your plan.  I couldn’t agree more.

You see, confidence doesn’t necessarily come with simply having wealth.  More money brings options, but as they say, money doesn’t solve money problems.  There are many people, with lots of “wealth” that suffer from a lack of confidence.    In fact, Lilly is one of those people.    Lilly recently shared her story with me.   She is in her mid-sixties, and last year became a widow.  Her husband had mainly taken care of the financial details.   While she had been involved in meetings with their investment advisor over the years, she went because her husband had wanted her to. As Lilly said, she didn’t enjoy those meetings because she really didn’t care about what investments to buy or sell, she didn’t understand the financial jargon, and because of the nature of the meetings, just didn’t feel like she had anything to add to the conversation.   Lilly said she just cared that they seemed to have enough money, it was being taken care of and that was all that mattered.   But now that the responsibility for finances is solely hers, when she got her March statements showing a significant decline, when the news media was filled with doom and gloom, very quickly she went from feeling reasonably secure about her finances, to suddenly being very fearful.

For Lilly, not only was she adjusting to managing on her own, but the extreme volatility in the investment markets made her fear that she wouldn’t have enough for her lifetime.  Even after the declines of the market Lilly is a wealthy woman, but a dollar figure of wealth doesn’t bring her confidence.  You see, it’s not what your portfolio is worth, it’s whether or not you have what you need that makes someone confident in their financial security.

The 2020 Investor Research report included the clarity of the clients’ plan as contributing to financial self-confidence.   I suggest clarity of plan doesn’t mean just having a plan, it goes further than that.  What good is a plan if it sits on a shelf collecting dust? Let’s face it, that’s what most peoples’ plans do.   You do them once, feel good that you know how much you have to save or how much you can afford to spend, time goes by and you have no idea if you are on track or not in good times, let alone in the event of bad times or crisis.   Having a plan is one thing, tracking your progress is how you can have confidence in those plans.   Once a year, check-in and see are you on track to where that plan had projected you would be.  In times of crisis if you are concerned, check-in to see if you are still within a reasonable range of being on track, and/or if anything needs to change.   This ability to check your progress gives you that sense of control, a belief in your ability to maintain your financial security, and provides clarity of your plan.  Lilly now has a plan and a simple one-page progress report to keep her on track.   While she still has a journey to get to a place of being able to say she is highly confident in her financial knowledge, she is no longer fearful about whether or not she will have enough, and for now, that gives her peace of mind.

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