Midyear Review

By David Chazin

Summer is traditionally a time for fun, family vacations and a more relaxed pace of life - though maybe not so much this year if you might be affected by the "ROM." With everything going on, it's a good idea to consult a financial planner for a midyear review to see where you stand in terms of your ability to achieve your short- and long-term goals.

The Short-Term Picture
If you're not yet through the ROM and unsure what the future holds, now would be a good time to get a handle on your monthly expenses and determine which are necessities and which can be cut down. You can then look at how much money you have in cash, savings, and other easily-accessible vehicles to see how much "emergency money" you have. You can also do an examination of your upcoming cash flow, which might be affected by a lower paygrade or severance/unemployment if you're forced to leave.

You should also evaluate the health insurance and life insurance you have both through your current employer and individually to see if you may need to make any adjustments. And many employees might have decisions related to exercising stock options or choosing to take their CRP pension as either a lump sum or monthly payout.

Benchmarking Overall Progress
On the investment front, the impact of whipsawing markets on your returns both inside your ESIP and out is probably hard to ignore, and while it's sensible to gauge the performance of your investments against appropriate market benchmarks, this is only a small part of the review process.

Clearly, your overall returns and relative performance matter. But you should keep in mind that the most relevant benchmarks are the targets that have been built into your overall financial plan, such as when you want to retire. And if you don't have a thought-out financial plan, you should consider speaking with someone, because that's the best way to evaluate your ability to reach your goals.

Asset Allocations
More important than tracking the ups and downs of individual investments is looking at how closely your portfolio's current composition matches up with your targeted asset allocation and rebalancing, if necessary. If one asset class has performed better than others (for example, if bonds outperformed large-company stocks), you should take profits and redeploy capital into underperformers. Regular rebalancing will help keep your allocation appropriate for your time horizon and risk tolerance.

It may be tempting to tweak your asset allocation by making tactical shifts into certain sectors of the market that you believe will outperform others, or moving into cash when markets are weak. Just know that trying to time the market results more often in pain than profit.

It's human nature to try to outguess the market, but timing is only easy in hindsight. In order to be successful at it, you have to be right twice-deciding when to get out and when to get back in. You may be better off by simply filtering out the noise of short-term market fluctuations and staying the course with a well-diversified portfolio.

Long-Term Goals
The time to make adjustments to your allocation is when your personal situation or financial objectives might be changing, such as being affected by the ROM or celebrating the birth of a child. Maybe you're contemplating purchasing a new vacation home or rental property, or have accelerated your own plans for retirement. A financial planner can help you assess the impact of these developments on your existing investment strategies and suggest modifications to help you achieve your new goals.

A midyear review is also a good time to explore your vision for legacy and estate planning. At some point, you may realize that your assets are sufficient to maintain your desired standard of living for the rest of your life. When you reach this point, the driving concern is not so much on accumulating wealth, but deciding how best to preserve and transfer it.

Estate planning is all about making decisions today that affect where your money goes when you're gone-either to your family, to charity or to estate taxes. During your midyear review, you may wish to discuss gifting strategies and trusts that can help minimize the impact of estate taxes and ensure that your vision for your legacy becomes a reality.

I'd be happy to sit down with you to evaluate how you're positioned during the ROM and review how well your current financial strategy matches up with your goals. Because I work with many executives, managers, employees and retirees, I'm very knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to oil company employees (in addition to the retirement, investment, and estate planning issues everybody faces). Please contact me at (925) 659-0251 with specific questions or to schedule a time to meet.


David Chazin, Insight Wealth Strategies and Lincoln Financial Advisors Corp are not affiliated with Chevron.