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Author: Don Obrien

How Strong Is Your Financial Foundation?


A few weeks ago, we had some serious storms in the Midwest, with straight line winds of up to 96 miles per hour—the strongest we’ve experienced in a decade. As you can imagine, hundreds of trees were knocked down and uprooted, resulting in damage to homes, cars, fences and power lines. Some of these were large mature trees laying on their sides with their massive root systems exposed, next to gaping holes marking the spot where they had stood for decades. That got me thinking about the lessons we can take from trees when it comes to planning for the challenges we face in our own lives.

One of my favorite sayings is “plan for the worst, hope for the best.” It’s a simple concept, but a powerful one. Trees are really good at this. When they’re not under tremendous stress from conditions such as drought or fire, they channel all their energy into fortifying themselves. They take in nutrients that enable them to put down new, deeper roots and help them branch out in search of sunlight. This helps to ensure that they’re strong and better prepared to withstand any adverse conditions that may lie ahead, from wind and rain, to drought, wildfires and more.

As humans, do we do that enough? Ideally, the time to plan for the challenges ahead is when things are going well, not once the storm clouds have gathered. While you don’t want to spend all of your time worrying about things that could possibly happen in the future—it is important to evaluate the strength of your root system from time to time. That’s because—whether we’re talking trees or humans—what appears on the surface is not necessary indicative of what lies below. Sometimes, a tree that looks beautiful above ground can have a weak or unhealthy root system hidden deep below ground. Similarly, outward appearances don’t always tell the full story when it comes to our own physical, emotional or financial health.

Root systems can also be deceiving in other ways, as well. Take the majestic redwood, for example. The Giant Sequoia (Sequoiadendron giganteum), one of three species of coniferous trees known as redwoods, is native to the western slopes of the Sierra Nevada mountains. They are among the planet’s oldest and largest trees and can grow to up to 350 feet tall and 20 to 30 feet or more in circumference. They are known to live up to 3,400 years and hold the distinction of being the largest trees on earth in terms of total wood volume. As such, you’d assume their root systems reach deep into the earth to support all that weight and height. But you’d be wrong. These enormous trees have a unique root system that only goes down 6-12 feet. Yet, they rarely fall over. Why? Their root system is intertwined with the other redwood trees, literally holding each other up. The trees, which grow very close together, are also dependent on each other for nutrients. For more than 70 million years they have thrived by intertwining their root systems to create the foundation required to maintain their equilibrium and access the resources they depend upon to flourish—individually and collectively.

How strong is your root system?

A healthy root system not only creates a stable foundation for nurturing growth, but the resilience required to thrive under challenging and stressful conditions. That’s also important when it comes to your finances.

Like the roots of a Great Sequoia, your finances are interconnected. Each financial decision you make impacts other decisions, which—in turn—influence your ability to accomplish your life goals. For example, choosing whether to contribute to a traditional or ROTH IRA determines whether you pay taxes now or later on that income. Doubling monthly payments on credit card debt now means less money lost to high interest debt maintenance later. And how much you choose to save now will influence when you can retire with the confidence that you can pursue all of the goals you have set for the next great chapter of your life.

However, when financial decisions are made in a vacuum and are not tied to a bigger picture, that can threaten your ability to accomplish all of your goals. That’s where a financial plan can help. Planning helps to build a strong foundation while anticipating the unexpected, so that you’re in a better position to weather changing circumstances. It provides a framework for evaluating important decisions—from career changes, to buying a new house, or how you will pay for a child’s education costs—in a manner that’s aligned with your goals and time frame. While the planning process cannot eliminate surprises or unexpected events, it can help provide the confidence that you are positioned to weather any storms that come your way. Who you choose to work with to put a comprehensive strategy in place also makes a difference—especially as your wealth grows over time and managing it becomes more complex. Partnering with fiduciary advisors, who have a stake in your growth, helps to ensure that the important legal, financial and tax planning advice you receive is not only in your best interest but is implemented in a timely manner to support your goals.

To learn more about creating a strong financial foundation, download 10 Questions To Ask Your Advisor.



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Oliver Bolt

Oliver Bolt

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