Setting Accurate Expectations with Our Financial Planning

Setting Accurate Expectations with Our Financial Planning

As we reflect on the past year and look ahead to the future, it’s an excellent time to reassess where we stand financially and recalibrate our goals.

One of the core principles of successful financial planning is managing expectations—a concept that plays a vital role in pursuing long-term financial stability. Here’s why managing expectations is so powerful and how it can shape your financial journey.

Setting Realistic Return Expectations

Recent years have brought significant market gains, leaving many investors optimistic about continued high returns. While we’ve seen strong performance, it’s crucial to remember that such
results aren’t guaranteed year after year. “Don’t get used to these really good returns,” we often tell our clients. As much as we’re optimistic about the future, we must remain vigilant and
prepared for potential market volatility.

For example, in December 2024, after the Federal Reserve’s interest rate announcements, the Dow dropped 1,000 points in a single day. Events like these highlight the importance of staying
grounded. Our clients understand that 20%+ annual returns are not the norm, and we work to ensure they’re prepared for periods of uncertainty.

Grounding Financial Plans in Conservative Projections

At Van Leeuwen & Company, our approach to financial planning is rooted in conservatism. We model returns between 6% and 8% annually, factoring in inflation at 4%. This gives us a “margin
of safety,” with the goal of ensuring clients are well-positioned to stay on track even when markets underperform.

By setting conservative benchmarks, we align expectations with reality, creating what we call a “bogey.” For instance, if inflation is 4% and we target a 6% return, the 2% margin helps clients
stay ahead without overreaching. This strategy not only builds financial stability but also empowers clients to weather down years, such as 2022, when markets experienced significant
losses.

Managing Emotions and Staying Focused

One of the most challenging aspects of financial planning is helping clients avoid emotional reactions to market swings. We’re not traders; we’re long-term investors focused on company
fundamentals, products, management, and interest rates. This perspective helps our clients remain calm even during turbulent times.

We translate market performance back to the financial plan, emphasizing goals over benchmarks. “Our goal is to get clients to their goals, not to shoot the lights out and compare
with their brother-in-law who says he always beats the S&P,” we often explain. By maintaining this focus, we want our clients to avoid the pitfalls of chasing returns and pursue what truly
matters—financial independence and confidence.

Preparing for Life’s Surprises

Managing expectations also means planning for the unexpected. Whether it’s a significant purchase like a shore house or a life event requiring liquid assets, early communication is key.
We encourage our clients to share their hopes, visions, and dreams so we can prepare and guide them effectively.

At the end of the day, financial planning isn’t just about numbers—it’s about helping people live the life they’ve envisioned. By setting realistic expectations, focusing on long-term goals, and maintaining a conservative yet proactive approach, we position our clients to be ready for whatever the future holds.

For Today And Tomorrow

Managing expectations is more than a financial strategy; it’s a mindset. By staying grounded, planning conservatively, and focusing on what truly matters, you can navigate market uncertainties with confidence. At Van Leeuwen & Company, we’re here to guide you every step of the way, aligning your financial plan with your goals today, tomorrow, and for years to come.