How to Financially Plan in Uncertain Times with Bangor Savings Bank

Two managers at Bangor Wealth Management tell us how the pandemic shifted people’s priorities, what federal changes they’re watching, and why having a financial planner is more important than ever.

The past two years have ushered in dramatic changes for all parts of our lives, from how we work to how we shop to how we celebrate birthdays. Financial planning hasn’t been immune to changes, so we spoke with Natalya Pearl, vice president and senior relationship manager at Bangor Wealth Management of New Hampshire, and Derek Davis, vice president and relationship manager at the bank, to learn how the COVID-19 pandemic has altered the landscape of wealth management.

How have individuals’ priorities shifted since the pandemic?

Natalya Pearl: It’s been a period of self-reflection for folks. People are reevaluating their goals and their careers. The question that I have been getting a lot is, “How can we do this and retire at the age of 60 instead of 65?” At the same time, I have had some folks who do not want to retire anymore because they just cannot do the things that they have been looking forward to, like international travel.

Derek Davis: Another topic that comes up in my conversations with clients is them realizing that they’re not in love with their career, and they want to try something different or pursue a hobby and spend their working years doing something they’re more passionate about. Working with them to make sure their financial plan is going to be able to allow them to be successful and provide for them no matter how this new endeavor turns out is important.

What are some financial lessons that were learned during the pandemic?

NP: Everyone realized that an emergency fund was important. It’s crucial to have those three-to-six-months’ worth of living expenses, just in case things like a pandemic happens. The pandemic also reminded people to avoid emotionally driven decisions when it comes to money. The stock market was in turmoil in March 2020. There were a lot of people who were in panic mode that needed a reminder that we are investing for their long-term goals. If you did sell at the bottom, you wouldn’t have seen the strong comeback that markets have experienced since then.

How should people prepare for uncertainty in the future?

NP: Beyond the emergency rainy-day fund, people have to figure out if they have adequate coverage in terms of health and life insurance. This year was one when people were more open to talk about their estate plan and if they have one in place.

DD: I think the best way for individuals to prepare is to lean on the knowledge of a financial planner. You can see just from the topics Natalya brought up that we are aware of the things that you should be doing to make sure your financial ducks are in a row. And should the unexpected happen in the future, be it a pandemic or health event or family needing care, working with a financial advisor will provide you a plan to overcome those obstacles before they ever appear.

How have recent federal legislation changes impacted financial planning?

DD: Some of the positive regulations that were updated primarily came in the SECURE Act. Prior to the new law, individuals would have to start taking money from their retirement accounts when they reached the age of 70 and a half. That’s now been bumped to 72. Another positive is that investors are now allowed to take money from their retirement accounts to off set costs of either childbirth or adoption. There’s also the ability for college savings accounts to be used toward school loans. Finally, they made it even easier for part-time workers to be covered by employer retirement plans.

NP: The biggest negative with the SECURE Act is that they eliminated the stretch IRA. Prior to Jan 1, 2020, if you were a beneficiary of a large IRA, you had your entire lifetime to distribute those assets. Now, if you’re not the spouse (or one of the exempt beneficiaries), you only have ten years to distribute those assets. Our job is to monitor changes, and help people adjust their plans, if needed, in light of those new rules.

What can working with a financial planner do for a client?

DD: We work with our clients to help them achieve financial goals, timeframes, and understand what their current resources are. From there, we map out a way to most efficiently and effectively achieve their goals. But, more importantly, we also take the time to monitor the progress and make changes should those goals and timeframes shift. A big misconception is that you only need a financial planner when you’re in your 50s or 60s or right about to retire, but a financial planner can be used to help you work towards any financial goal at any age.

NP: The holistic approach is probably the most important thing that we can stress. I help folks with more than just investing their assets. For instance, during open enrollment period I assist clients in choosing a health insurance plan, help them get a tax break by investing in health savings accounts or flexible spending accounts; evaluate the cost of group term life insurance, review their disability coverage and contribution rate to their employer sponsored plan. It’s not just investment management—it’s all of the pieces of the puzzle.

What would you advise people who say that they can just manage their wealth using different online resources and tools?

NP: There are many tools available and some folks feel they can do it themselves, but it’s not about what you know—it’s about what you don’t know. Even if you’re convinced that you can do it yourself, you should certainly give a financial planner the chance. You may be thinking that you’re addressing all of the areas of your life, but I can almost guarantee you that you’re not. We can all try to be the mechanic and work on our own car, but there is something to be said about going to see that professional.

DD: I think that if that’s the client’s enjoyment and passion, great, but we also don’t want to put them in a position where their financial future is dependent on them placing the right trades.

Wealth Management products are: Not FDIC Insured | No Bank Guarantee | May Lose Value

Share The Inspiration