Broker Check
Building Blocks of the Plan

Building Blocks of the Plan

February 19, 2019

This is the second post in our blog post series: The Good, the Bad, and the Ugly of Financial Planning. Just kidding. It’s really just called Financial Planning. Don’t lose consciousness yet. I promise to make it as un-boring as possible.

If you’re wondering where the first post in the series is, look no further. It was last month’s post. I’m hoping this series will nullify the eyes-rolling-back-in-head response when I say, “financial planning, budget, asset allocation, insurance, and investment strategies.”

So, here it goes.

I loved playing with blocks as a kid.

There always seemed to be lots of different blocks to choose from. Some were square with letters. Some were orange triangles. The best ones were the arches to make bridges with. I gravitated toward the ones that were natural wood with no paint. They always smelled so good. The best part? Knocking them all down after building the highest tower possible.

I built houses, castles, forts, and tanks. Tanks made from blocks didn’t move very well. But I thought they were cool. When you’re a kid and you start to build something out of blocks, you naturally start at the bottom of the structure. A child’s mind logically starts building at the bottom and works its way up to the top. Duh, right? 

Gravity requires that and it just makes sense. 

So, why do us adults have to make it vastly more complicated? Especially when it comes to building our financial houses. We want the fun stuff. The cool stuff. Like a Mustang GT-350. Is that just me? It’s just me. 

We neglect starting in the logical order—laying the foundation first and working our way up.

When my team and I wanted to create a visual way to represent the parts of a financial plan, we came up with an image. We’re calling it “the glacier” for now. It’s how we structure a financial plan. 

Starting at the foundation, here’s what each plan looks like. At the bottom, we’ve got those things that are not very fun. Let’s face it, no one likes paying for life insurance or thinking about the reason we buy it. But, these blocks are foundational materials. These come into play when something unexpected happens. When Murphy of Murphy’s Law visits you. This is being laid off your job. Getting into an auto accident. El Nino hovering over your home and blowing your outdoor trampoline into your neighbor’s fence. Getting a staph infection and ending up in the hospital. You know—life.

The foundational items help to ensure you against risk, which boils down to unpredictable life events. None of us have a crystal ball.

You’d be surprised how having the right types of insurance, cash in the bank, and little to no debt can allow logic and reason to guide financial decisions. And, in a way that having a large 401(k) balance probably cannot.

If you discover that you have not built the foundation to your satisfaction, you can always go back and address this. Again, nobody thinks life insurance is fun, but most people do not have enough. 

Once the structural foundation is set, that is the best time to build the next level. The next two layers— medium-term strategies and retirement planning – seem to be the ones people gravitate to and want to start building first. I steer my financial planning clients to not start here. Because put in the right order, you can build these two layers faster when you complete the foundation first.

The second layer includes shorter term goals like saving a down payment for a home. This seems easier to accomplish. This path is more clear. Because these building blocks are easier to tackle, we build them next.

The third layer seems to be harder to attack. Because a larger goal like “a secure retirement” is much more nebulous. The path to this goal is fuzzy. People start to think, “I’ll never be able to retire so why put in the effort?” 

I look at this differently. Not only because I’ve been doing this for 20 years, but because my clients’ futures matter.


It’s obvious, but just to be clear: robbing banks should never be the default plan. 

If I can’t help my clients see retirement differently, I’ve failed. Part of my job is helping my clients to re-examine these blocks and layers. Once they have the proper view, I can then educate and coach them. Then, together, we determine the best order to build them in.

For instance, maybe you put a little into your 401(k) at work because you have a good employer match, but you place more focus on saving a down payment for a house. Or maybe you don’t allocate resources to the college savings block because Junior can always get a J-O-B to pay for his in-state tuition. Skin in the game is good in your book. Again, we work together on the priority, but ultimately, my clients make the decisions. This is their life and their money. And it matters.

The last layer is legacy planning. It sits at the top of the glacier, which is the best building block in my opinion. Why? Because if you execute a financial plan correctly, odds are, you’ll have money that you are not going to spend before you die. Spoiler alert: you can’t spend money from the grave.

But you can give it away to your family and your community. The cool thing is that you can build a legacy of generosity in those around you by leading the way first. 

Legacy planning comes into play after the other building blocks have been properly placed. We love generous people. We encourage it. But to do it at the expense of your ability to retire? That's not the way to do it. You don’t want your own generosity to be your financial undoing because you are giving away money that you don’t really have to give. 

Another benefit of proper planning is minimizing or even eliminating having to hand the government your money in the form of taxes. It’s not a happy thought to envision the government benefiting from your planning and hard work. But directing those dollars yourself? That’s a very happy thought.

My favorite “seeing your tax dollars at work” project was a university grant that funded a study on—wait for it—the effects of bovine flatulence on global warming. Don’t fund farts unless you want to.

I liken legacy planning to knocking down all those blocks after you have built the highest tower possible. It’s fun to plan for that.

If you’re not ready to plan for your legacy and wealth transfer, don’t despair. Don’t let any of this deflate you. It’s never too late to restructure your financial house. Take the first step. Just start.

Next month, I’m going to make the path clearer. I’ll go into more depth about each of these financial building blocks. Then, I’ll tackle how your goals feed and guide the financial plan.

Your goals can be accomplished by working with the resources you have available right now. But you’ve got to connect the resources you have today with your vision for your future. 

Stay tuned. I’ve got a, hopefully entertaining, Rocky Balboa metaphor planned.

* Cover photo by La-Rel Easter on Unsplash