Wealth Building: A Marathon…Not a Sprint.

This year’s Boston Marathon took me down memory lane. While working at John Hancock, I applied to run in the 2015 Boston Marathon on a sponsor’s exemption. I was nervous, and uncertain what the event would be like, but I knew it was a goal to go after if I was selected. The very next day I received the good news. That’s when the big questions started coming.

​What do I do now? What do I do next? How should I train even though I know how to run? What is the process for preparation to be able to reach the goal of crossing that finish line?

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​To prepare for competing in the marathon my focus turned to how to navigate between getting ready to compete, and then the endurance necessary between the start line and the finish line. Reflecting upon this, I was inspired by many similarities to preparing for and nurturing wealth building.

In a marathon, there is an end in mind … crossing the finish line. Running the marathon to completion is akin to seeing all your hard work pay off. But it isn’t just about the finish line. In a marathon, you already know you need to run 26.2 miles. You might have a time that you want to finish within. Like wealth building, you should understand your goal and its timing.

What is the finish line for your wealth building? Is it getting to retirement with the financial wherewithal to enjoy it? Is it beyond retirement to building generational wealth? Knowing your end target is necessary to properly prepare and plan.

​Whatever your end financial goal is, here’s what it will take:

• It takes time. You can’t just show up on the day of the marathon hoping to finish and reach your goal. If I had attempted to run that marathon on the day I was accepted, I would have failed miserably. Time was my friend and my opportunity to map out what I needed to do daily, weekly, monthly, and even when I reached the day of the big race. Preparing for the marathon is akin to preparing to hit your lifetime financial goals. They typically don’t occur overnight. It takes a combination of strategy with daily, weekly, and monthly commitment and recognizing where you need training and knowledge combined with an ability to be coached, adapt, and respond when necessary.

• It takes attention. I needed to take the time to consider and understand my options in everything from training equipment and programs to footwear and running gear. Asset protection strategies you may need along the way to your financial planning goals are like having the right clothes and shoes to run the race without discomfort or injury. It also means paying close attention to the details of what you have and do not have. I am amazed at the number of executives I have seen over the years who merely glanced through their corporate enrollment documents, not fully understanding what they ultimately mean financially for them and their families in the long run.

• It takes discipline. There were times when the weather would be less than inviting, but I had to remind myself of my goal and stay disciplined, not allowing a little stormy weather to keep me from my conditioning plan. The same can be said for financial planning and the importance of holding firm versus overreacting to a volatile market, or unexpected life events. A financial plan, just like a conditioning plan, helps keep you focused on your overall strategy and end goals, keeping you from reacting emotionally. You need the right tasks scheduled, and then you need to be committed to performing those tasks, whether it is contributing to your 401(k), savings, or a college fund.
  
  ​Another aspect of discipline is not to race against or compare yourself to others. Social media today has us comparing ourselves to others. Remember that it is your race and your goal. Taking too much risk, like starting too fast to keep pace with someone else in the marathon, would have spelled trouble for me at the end of the race. Too many people take too much financial risk in trying to “keep up with friends” and what they are doing with their portfolios, retirement plans, or savings avenues. No one’s situation is exactly like yours, so don’t take other's risks when making your wealth-building decisions.

• It takes a steady pace. To prepare for a marathon you might have a per-mile pace you set to finish. You already know the date of the race, so training should be paced so you don’t overdo it and lose days of training due to sore muscles. You need to have a date in mind when you want to accomplish your financial goal so that you can plan for the pace at which you need to build your wealth. In a financial plan, you need to determine a savings pace you might need. We all face challenges in our financial goals. We can’t save or invest enough. When we do, the market might have an adjustment. You might need to slow down your pace a bit to recover but keep your mind on your goal, with a long-term mindset.
  
  ​This point cannot be emphasized enough. This graph from Fidelity regarding how savers and investors fared during the Global Financial Crisis of 2007 – 2009 reinforces the importance of not overreacting. As you can see by the breakeven, those who gave up didn’t recover, those who moved cash while continuing to contribute broke even and those who stuck with their plan outgrew their wealth.

Credit: Fidelity

• It takes coaching. You should have a coach holding you accountable for the process. This helped me in my mental and physical conditioning in preparing for and when running the marathon, just as a financial advisor should serve as a coach and a guide as you put your strategy into action to reach your financial goals. As a wealth planning “coach,” we want to know your goal, understand your starting point, and understand your current and future resources. Keeping you on “pace” and helping you see the finish line with the goal accomplished is part of our role as your advisor.

• It takes teamwork. Most people don’t think of a marathon as a team sport, but that’s where they are mistaken. Yes, running is a solo activity, but a team helps you adjust if an injury occurs or the weather changes. The preparation involves a coach, a fitness and mindset trainer, healthcare professionals, training buddies, and a supportive encouraging family. This team helped me look at my physical shape, athletic ability, and mental strength. It takes a team to reach your financial goals too, including your CPA, estate attorney, insurance advisor, financial and retirement planner, healthcare professionals, and yes, a supportive encouraging family helps too.

​Looking back, I will tell you that the joy was in the journey and the satisfaction was in finishing the race. It made sense later to me why the patient, consistent, steady build-up to race day was so important. Each day of training helped me get “one step closer” (sorry for the pun) to reach my goal.

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CASE BRIEF: ​Growth for the Long Run

Back in 1988, a client was working for a landscape company he dreamed of eventually owning and leading. His goals were clear about ownership and the areas he felt he could grow the company. He was committed to the hard work, time, and effort that it would take to make this dream a reality.
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Over the next two years, we helped him negotiate the buyout of the aging owners. Both parties wanted to see this company grow and the legacy of their service continue. With our guidance, this new owner laid out a vision for the existing employees, engaging them as the team key to growing the business. This owner knew the work required and understood that there was expertise he lacked in certain areas. As his “financial coach,” we stepped into those areas and began advising him about what he should consider doing.

Because of his discipline and his patience, he weathered storms no one could have foreseen. Because he had a clear vision of his finish line, he stuck to the plan and came out ahead each time. Over 35 years, he met these challenges by diversifying his opportunities. Diversification for him included launching businesses that contracted others to do the work complementary to his main business. He then brought these capabilities in-house, giving the business more stability through multiple channels of revenue. By diversifying his business, his portfolio holdings, and his wealth, it strengthened the whole body and framework of his financial plan toward reaching his vision — his finish line.

Today his financial wealth is on target and in good shape. He has a growing business, various real estate holdings, and something else of which he is most proud, his children, and the family’s next generation is involved in the business. It was his commitment to approach his role as a marathoner combined with trusting his team, heeding the advice, adjusting where necessary, reviewing the plan, and sticking to it, that helped everyone keep their eye on the finish line.

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​Many of our clients have accumulated wealth by sticking to the plan, remaining diligent, and not panicking if there is a setback. Because they knew the destination, they could be steadfast and confident in the long run. They know it isn’t a race to the finish, it is a journey.

It’s like our previous blog about growing grapes and making wine. Some things just take time. And along the way, you should also enjoy the fruits of your labor. You need to enjoy life in the here and now. I didn’t train for the marathon 24/7. I took some days off. You need some days off too, and to splurge a little as a reward for your discipline in reaching your milestones along the way.

Approaching your financial planning with patience, consistency, and a steady build-up is the best way to reach your finish line.

Empowering generations,

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Matt

Matt Hudack, ​CLU, ChFC