Who is Calling the Audible?

December 19, 2014

I have long been a football fan. I enjoy many parts of the game, but none more than watching a quarterback call an audible at the line of scrimmage. For those that might not know what “calling an audible” means in American football stay tuned.

Calling an audible is when the quarterback shouts out to his offensive line a new play, changing the one decided upon in the team huddle moments before. Why would he do this? As the quarterback approaches the line of scrimmage and begins his play calling, he realizes, based on the defensive formation, the play he is calling will not succeed. In less than a second he “calls an audible.” He communicates to his teammates by shouting out a new play in a disguised code or signal. The offensive line recognizes the new verbal cues, adjusts and executes an entirely new play to foil the defense. For a sports fan, this is exciting to watch but even more so to observe the defense react.

Consider the perspective of the quarterback. He sees the entire field and each player’s positioning, both offense and defense. Every player has his unique talents, skills and assignments to perform. Individual players see the micro, but the quarterback sees the macro. No other player on the offense has his perspective or vantage point; through his leadership and vision he leads the team.

In our financial lives an effective parallel can be made. Over our lifetime, each of us interacts with a variety of financial players or whom I will term micro managers. These are individuals with specific areas of expertise, and training.

Who are these micro managers? They might comprise your banker, attorney, property and casualty agent, CPA, financial advisor or broker, life insurance agent, mortgage banker or real estate agent. It’s likely that each of you has dealt with these individuals at one time or another, but here is the operative question. When was the last time you had all of these professionals in a room at the same time, coordinating and integrating important financial decisions to reach the best outcomes? I know, it has never happened and unfortunately it likely never will! But, wouldn’t that be helpful?

Can you imagine the efficiency that could be achieved through a blended collaboration of these talents? I would suggest each pre and post retiree needs a financial quarterback, someone who functions more like a macro manager to coordinate this effort. Do you have someone providing this independent function for you? In my opinion, this is essential for financial peace, because every once in a while you need someone to call a financial audible! Why?

Given the range of economic threats that pre and post retirees face in their financial lives, an independent minded financial professional is needed to ferret out the right course of action. Since our financial lives must be rooted in effective strategies to mitigate certain economic risks, pre and post retirees need a resource to independently guide and evaluate the advice received from micro managers.

Here are some basic examples of why this is important. The value of a property and casualty agent is to build a moat around your financial castle sufficient that if you get into an accident and it’s your fault, you don’t lose your financial nest egg in a lawsuit. Your financial advisor, who is engaged to help build your financial castle, should routinely call your property and casualty agent and inquire regarding proper coverage limits on your auto and home insurance. What point is there to build assets only to have them evaporate in a lawsuit? Growth is good, but protection is important as well, isn’t it? Do financial advisors make these calls? Unfortunately not!

Or, how about your attorney who is charged with the architectural task of drafting your living trust? Does he coordinate with your life insurance agent/carriers and/or financial advisors to make sure all of the primary beneficiary designations are correct on each account or policy? Some do, but most typically do not!

For pre-retirees, how about periodic mortgage decisions with respect to a 15 or 30-year loan? Your mortgage banker may push the 15-year loan due to the attractive lower rate, but the CPA is siding with a 30-year loan because of the extended interest tax write offs. Which is the right course?

For post retirees, what about designing retirement income streams in the distribution-spending phase of life? Traditional advisors tend to focus solely on rates of return and miss the larger purpose of maximizing secure lifetime income streams. They often miss the discussion of withdrawal rate risk, sequencing of returns and the inclusion of actuarial science.

In each case, and many others, a macro manager is needed with a unique view to quarterback one’s financial life. Given that many live in retirement for a third of their lives, engaging someone with an independent perspective is essential for success. If you find yourself needing to call a financial audible then step up your game and do so. The results will likely be an increased sense of financial peace.