When Plans Change: Reacting To The Unexpected

By December 19, 2023Uncategorized

To quote a famous boxer, “Everyone has a plan until they get punched in the mouth.”

Plans are created to achieve a personal or financial objective. Whether you have your own plan, create one with the help of a financial advisor, or are just thinking about creating a plan, the ultimate success of the plan will depend on how you react to the unexpected.

Expect the Unexpected

One of my clients faced such an unexpected situation. He had left his stable corporate job to start his own business, with the eventual goal of selling it and using the proceeds to retire early. The plan we created together estimated that he would be able to sell his business within another three years.

However, volatility in the stock market altered the trajectory of his business plan. The resulting new investment landscape meant that he was no longer able to raise money to fund the growth of his company. In fact, not only would he no longer be able to sell his business within three years, but he would now have to use some of his own funds to drive the growth of his company.

A second client was caught up in an unfortunate situation. An executive at a tech company, he was laid off after his employer’s Board of Directors decided to pivot to a different business strategy. The change effectively made his position and skill set no longer a match for the company’s needs.

Not all changes are necessarily bad. Client number three was on a steady path towards financial success. The financial plan we had created together was proceeding as expected. Well enough that he and his wife decided that she could take a few years off from her career to start a family. They were hoping to have a child—and were blessed beyond their wildest expectations with triplets! While this was a very pleasant surprise for them, it obviously would have a significant and unexpected impact on their financial picture.

What did these three clients have in common? They all were following a plan, but an unexpected change happened.

Dealing With Unexpected Change

When an unexpected change happens, it’s natural to second guess yourself and wonder if you made the right decision. In some cases the unexpected shock can cause you to rush into thinking that you need to do something right now. While the situation might have changed and the “hot take” is that something needs to be done, this “rapid reaction” approach is not always the right thing to do.

First, Take A Deep Breath

Avoid the temptation of thinking that you must do something immediately in response to the shock. Using whatever personal method you’ve developed for yourself, take a deep breath/pause/short mental break.

While you do need to see if there’s a need to do something different, that’s different from actually jumping into doing something different.

Acknowledge That “Life Happens”

It is also important to recognize that plans generally don’t go exactly 100% as expected. If anything, it’s almost certain that there will be bumps in the road along life’s journey. You should remind yourself of this truth whenever you begin executing a plan or experience an unexpected change.

Confirm If This Is Still What You Want To Do

The silver lining of an unexpected change is that it’s an opportunity to take a pause and do a sanity check of your plan. Will this change affect your passion, purpose, or priorities? If so, then what are your new priorities? Will they require updating your plan or creating a new plan altogether? If you determine that you want to stay the course, then you also want to determine  if the approach you’ve been taking will still be the right one going forward.

Of course, talking about it with your spouse/partner and/or financial advisor will aid greatly in this process.

Update Your Options

The sudden change is almost bound to have affected your financial picture. The one thing you definitely should do is to work with your financial planner to see how the change will affect your plan. It won’t necessarily mean that the plan is no longer viable, but it might require a different time horizon or an alternate methodology.

Put another way, you don’t necessarily abandon the journey because there’s a pothole in the road. It’s definitely worth checking though to make sure “is this destination still where I want to go?” If so, you might have to drive slower over it, steer around it, or maybe find a detour. The same concept applies to financial planning.

An experienced financial planner can also help you come up with options and solutions you might not have been aware of.

Expect Obstacles

In the end, expect plans to run into obstacles along the way. Having a plan, understanding both your available options and their time horizon, and periodically reviewing it will give you the confidence and feeling of security to help you get over the bumps in the road.

Having an experienced financial planner along for the journey can help you work through these challenges and design a collaborative solution as needed.