Investing and financial planning in a post-COVID 19 world

July 16, 2020

Fred Wainwright,

A crucible moment is one which changes you forever. The Coronavirus has made it abundantly clear that life is precious and fleeting. A few mornings ago, I woke up my young daughter and told her that she could have the puppy she had been eagerly wanting and I had been resisting. She hugged me tightly and did not let go for what seemed like a very long time. Her hug will be with me for the rest of my life.

I have since asked my wife and daughters to think about how we can emerge from this crisis having accomplished something truly meaningful for ourselves, our loved ones and our community.

What will be your legacy?

Restaurant and airline reservations have ticked up from their lows. Some in the media and in government are saying that the world will go back to normal and COVID will be forgotten as soon as a vaccine is available. There was a post-World War II boom and the U.S. economy recovered after the 2009 recession. Today, global central banks and legislatures have stepped up to bridge the many gaps in the economy; however, we will continue to live in a world of probabilities.

We cannot control a greedy or fearful stock market, but we can take actions for ourselves. Keeping in mind just how interconnected we all are, perhaps we should consider a new direction and a more holistic life plan. What quality moments do you envision having with your loved ones? How would you like to be remembered by your friends, your favorite charities and the world at large?

A transformed plan

A meaningful legacy is based on a good plan. For example, where would you like to retire and what would you like to do in retirement? How much will it cost annually? Having visualized your ambitious dreams and achievable goals, consider a comprehensive wealth management plan.

For each item below score yourself from 1 to 5, with 5 being a strong reflection of your personal values as well as the greater good of your family and society.

Investments
Insurance
Retirement accounts
Tax planning
Banking
Financial planning
Business succession
Durable power of attorney
Family gifting
Charitable gifting
Titling of assets
Executor / trustee
Distribution of wealth

Alignment with your values

It can be argued that COVID and other diseases have emerged due to uncontrolled land development and the increasing contacts between humans and wildlife. Smog has cleared in many cities, but as the global economy restarts the issues of climate change will return. Can your investments reflect your values?

Sustainable, socially responsible and ESG (Environmental, Social and Governance) investing has been gaining momentum. Ethics and innovation are winning.

Is your current allocation to stocks keeping you awake at night? If so, consider a modest equity reduction in the account most likely to be used as a savings backup or early in retirement. Accounts dedicated to longer-term goals, such as providing income or supporting future generations, can remain more aggressive.

Stay invested and diversified in equities for their dividend payments and to overcome inflation in housing, medical and other retirement expenses.

Post-COVID strategies

Financial planning is evolving. Individuals and businesses will have to have much more cash in savings for emergencies. Personal and business financial projections will need to be more sophisticated, encompassing a broader range of potential outcomes.

The definition of essential and discretionary expenses may need to change for you. Consider a small permanent budget cut rather than a painfully large change. Cool new car payments or hot monthly contributions to your Roth IRA?

Lifelong access to quality healthcare is essential. Do you understand your Health Savings Account or Medicare insurance options? Is your healthcare proxy form up to date?

If you are a business owner, consider how you will systematize resilience. The value of your business will most certainly increase the better its succession plan, its emergency plan and its employee health plan. Get to know and pronounce EBITDA.

You are now a Zoom expert — envision yourself as a valuation expert. Should you transfer closely held shares to your family members at lower values now?

Assume you sell your business for that magic multiple. We have read about many acts of bravery, compassion and community recently. Are there impactful charities that are new to you and deserve your largesse?

Building your team

You are not alone. You can build your team of advisors among accountants, business appraisers, estate attorneys, insurance specialists and yoga masters (let us slow down the aging process).

Your team will help you avoid cognitive and emotional biases and increase the probability of achieving your newly transformed legacy.

The puppy’s name will be Vida, which in Spanish means life.

Fred Wainwright June 2020 Fred Wainwright is Senior Investment Strategist and Head of US Equities at Ledyard Financial Advisors. Fred is a member of the CFA Institute and a graduate of Stanford University and the Tuck School of Business at Dartmouth. He is a member of the Class of 2020 of Leadership New Hampshire.