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Most people don’t realize they have a financial blind spot until it they’re paying the price for it.
It might show up as a missed opportunity with an investment account, an unexpected tax bill, a hefty hospital bill following a health emergency or a retirement account that hasn’t grown the way they hoped.
No financial decision occurs in isolation. However, when people accumulate wealth, their complex financial pictures can cause them to forget the interconnected nature of their finances.
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For example, a decision about retirement contributions can affect taxes, which can then affect cash flow. This in turn can influence investment strategy or estate planning.
Without a conscious effort to view financial decisions holistically, these blind spots can quietly form problematic gaps in a financial plan, and opportunities can slip by unnoticed.
This is further complicated when income increases or equity compensation enters the picture, and savings options multiply.
The following statements highlight some of the most common blind spots in financial planning. If any of them resonate, now is the time to take proactive steps to prevent any further damage to your financial picture.
1. ‘I’m not ready/I don’t need to get serious about a financial plan’
Early career choices about saving habits, retirement contributions, debt management and investment structure often snowball into much larger outcomes later in life.
The same goes with retirement planning — decisions about taking Social Security, structuring withdrawals, managing tax brackets and more should be made well before retirement.
The next step: If you know you have a big life change coming, start figuring out what is involved and what your options are before it’s too late to make the most of the situation.
But financial planning involves more than information. It involves prioritizing competing goals, understanding individual risk tolerance, navigating emotions during volatile markets, and tailoring decisions to your unique situation.
Technology can help with analysis and education, but it can’t replicate the human side of financial planning, which involves understanding personal motivations, life goals and behavioral tendencies.
The next step: Consider how you use AI to help you make important decisions, financial or otherwise. This includes how much of your personal information you put into these systems. Think critically about the responses and check for accuracy. “Because the AI chat told me so” will not hold up if you make a decision with undesired legal or financial consequences.
3. ‘I’ve already finished planning for retirement’
Estate planning and portfolio rebalancing don’t stop at retirement — they often become more complex after retirement. And retirement income has to be actively managed, so that it lasts and can meet expenses throughout old age, particularly healthcare costs.
The next step: Set up monthly or quarterly check-ins with your accounts online to monitor your cash flow and investments, ensuring you can be confident in your financial future. You can invite your accountant or financial adviser to join you.
4. ‘I can manage my finances on my own’
As income and assets grow, the number of options multiplies — and so does the cost of making the wrong call. You may need to navigate the complexities of equity compensation and savings vehicles as you make your way through your professional journey.
You will also need a plan for protecting, growing and transferring your wealth.
When you are managing your own money, you may have a limited point of view, and emotions or other obligations may steer you off course.
Professional advice can help you see what you’ve been missing and build a personalized plan around your life and goals.
The next step: If managing your finances is becoming too much to handle on your own, or you are curious about what you might be missing out on, including alternative assets you might not be familiar with, it could be time to consider professional help.
Objections to working with a financial adviser are common, and they deserve to be taken seriously. Negative prior experiences, misconceptions about cost or complexity, and uncertainty about the value being provided are all legitimate starting points for a conversation.
A trustworthy adviser should not immediately push back or try to change your mind. The adviser should listen, make an effort to understand the concern, and explore whether there’s a way to structure a relationship that genuinely addresses the concern at hand.
It’s easy to recognize financial mistakes in retrospect, when we’re counting the cost. But it’s far better to be mindful of your own blind spots now and think critically about how they might affect your financial plan and progress. Your financial future is worth the effort.
Crescent Grove Advisors does not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.
