Contrary to what you might think, financial independence isn’t just the result of enjoying a high income over the course of your career. It’s earned through two patterns of behavior:
- Making consistently good financial choices throughout your lifetime, and
- Maximizing the benefits of time so that the savings you invest can grow.
At C.H. Dean, some of our new clients are high-income earners who look to us to help them create a path to financial independence. Often they are tempted to fully enjoy the fruits of their hard-earned paychecks. This temptation is particularly frequent among our younger or mid-career earners who are doctors and dentists. These individuals have completed grueling years of medical school, residency, and fellowship, and now have intensive careers. They could also be attorneys or other professionals who have completed expensive graduate training and have a high degree of work stress.
However, more often than not, these individuals whose careers are taking off are faced with many immediate and competing financial responsibilities for their hefty paychecks. These obligations can include tackling mountains of graduate school debt, supporting a substantial mortgage, and raising a young family.
On the flip side, we also work with many professionals in their 50s who have achieved financial independence and are ready for a career shift that will reduce their income. These individuals have personally sacrificed quite a bit for career advancement, and are both ready and financially able to opt for greater personal freedom and less stress in their lives.
Best practices of high-income earners
Those who have achieved the enviable position of financial independence in their 50s have relied on us as their financial quarterback over the years and have employed these best practices:
- Articulate a clear vision for their life. Through candid conversations, we help these clients articulate and document their goals and priorities for the short, intermediate, and longer term. These discussions require introspection on the part of the client and their spouse or partner. The hard work in this activity comes from taking an honest look at your life and what you hope for your future. It involves making decisions about what you’re willing to trade off to realize your most important priorities. This exercise is the foundation of the financial plan we create for clients.
- Embrace a financial plan. A financial plan is a strategic set of wealth strategies that considers the client’s goals over multiple time frames. Our plans are customized to the client and can include ways to prudently reduce debt, save for specific goals, minimize taxes, and simplify your financial life. Two important elements in every plan are time and considerations for unexpected life events. Time is everyone’s most precious resource. The more time we have, the greater leverage we have to achieve our goals.
Unfortunately, life can also take unexpected turns. No one is immune. Illness, disability, and unforeseen financial responsibilities for children or aging parents can shake our world personally and financially. Our goal in the planning process is to put you on a solid financial footing to ease stress during potentially tumultuous times.
- Invest, according to goals and risk tolerance. Money management is an essential factor in achieving your goals. We create personalized portfolios for clients based on their goals and risk tolerance. Our approach is to create well-diversified portfolios that generate competitive risk-adjusted returns. We like to take advantage of inefficiencies in the financial markets, while at the same time protecting your capital in down markets. We always monitor your portfolio and rebalance it as your life evolves.
- Pursue balance. We encourage our clients to make a commitment to finding balance in their financial lives. It’s important to enjoy life today, as well as in the future. We empower clients with the information to make prudent choices today so they can look forward to a prosperous and financially worry-free future.
Our high-income clients understand that financial freedom comes with its own hard work. It requires understanding the trade-offs of many financial decisions, then making appropriate choices based on the information at hand. It also entails leveraging the gift of ample time to build wealth.
As your financial quarterback, Dean will help you create and execute your game plan for financial independence and fulfillment.
Dean Investment Associates, LLC (“DIA”) and Dean Financial Services, LLC (“DFS”) are each a registered investment advisor with the SEC and wholly owned subsidiaries of C.H. Dean, LLC. Dean Capital Management, also an investment advisor registered with the SEC, serves as the sub-advisor for DIA. Dean Capital Management is an affiliate of C.H. Dean, LLC. Readers should note that asset allocation does not guarantee a profit nor eliminate the risk of loss.