Whenever you go into the doctor’s office for a check-up what’s the first thing he or she usually does? The doctor checks your vital signs. Generally, this is heartbeat, blood pressure, breathing, reflexes, etc. Sometimes either the doctor or the nurse practitioner will have a questionnaire asking various questions such as number of drinks per day, whether or not you smoke, and any allergies – to name a few.
Most individuals give this information without thinking twice. Most of the time, the answers we give don’t change. So why does the doctor keep asking the same questions every time we have an appointment? The answer is because if one of these answers does change (such as an irregular heartbeat or high blood pressure) this changes the potential diagnoses and outcome.
This is why it’s important in your financial planning to always check your vitals. In other words, even though you think you’re financially “healthy” let the financial professional look at your auto, home, life, health and disability insurance to check coverage and liability limits. Most of the time an individual is going to be ok. However, there are times where someone thinks they’re healthy, yet their coverage is inadequate. For example, maybe the individual has comp and collision deductibles on vehicles that are old. The coverage was necessary 10 or 15 years ago, but not today. This would be the equivalent of being on antibiotics for an illness, but still taking them when the illness is cured – and continuing to pay for the prescription!
Additionally, levels of debt and savings should be checked frequently. Are debt ratios improving or getting worse? Has the savings rate changed or does it need to be changed? Someone saving $50 per pay when they were first hired may need to up that amount as they receive increases in annual salary. If they’re not asked, they can wind up with considerably less in retirement, yet their earnings allowed them to save more.
Individuals may find this hard to keep track of so it’s important that their financial professionals be vigilant in always asking. For the financial professionals, it can be difficult when they become focused on one area of planning – such as gathering assets or selling products. The point is that just like the body’s vitals, financial vitals should be checked every time individuals meet with their financial professionals. Most of the time things don’t change dramatically. But if they do, financial professionals and their clients can be better prepared to move forward with an accurate diagnosis of the situation and the appropriate prescription to remedy the issue.