Risk Management Mid-Flight

by Lindsay Guido

Source: Wikimedia Commons.

On Jan. 15, 2009, US Airways Flight 1549 departed New York’s LaGuardia Airport with 155 people on board. Shortly after takeoff, the aircraft struck a flock of birds and lost all engine power.

Because of the plane’s low altitude, pilots Chesley “Sully” Sullenberger and Jeffrey Skiles were unable to reach any airport for an emergency landing.

In an act of expert crisis management and a rare “ditching” of a commercial aircraft, the pilots safely glided the plane into the Hudson River off Midtown Manhattan.

All passengers and crew were rescued by nearby boats in what became known as “The Miracle on the Hudson.”

Sully Sullenberger has become famous for his heroic role in “The Miracle on the Hudson.” He has spoken frequently about his experience, and attributed his success on that day to a set of internalized skills that include setting priorities, raising important questions, and drawing on the intellectual resources of everyone around him.

Sullenberger says this practice can be applied to any discipline involving human performance and inherent risk.

“Even though we get overwhelmed by the enormity and the complexity of the problems and issues of life, sometimes it feels like we’re trying to empty the ocean with a teaspoon. There is something in some part of our lives, of our world that we can control, and when we choose to try to make our little part of the world better—and it’s a choice that we have to make every single day – we can make a difference.” (Forbes, July 21, 2017, “Stick the Landing: An Interview with Sully Sullenberger”)

Living in what seems like a constant state of crisis can be emotionally exhausting. That is why the ongoing pandemic stressors are having such a adverse effect on people’s mental health. However, using Sully’s ideology of embracing responsibility, discipline, and the irreplaceable value of experience, we can remain calm and in control.

All the knowledge and resilience we accumulate in good times can protect and navigate us through challenging times if we make good decisions.

Lessons for personal finance

Decisiveness is key in accumulating wealth. Successful investors make decisions capably and confidently, while also remaining objective and flexible enough to adjust decisions as needed. As we review our clients’ – and our own – personal financial budgets for 2022, it helps to remain thoughtful while hoping for the best and preparing for the worst.

When mapping out income and expenditures, think proactively (instead of reactively). In addition to planning for daily expenses and hopeful travel plans, consider the following topics in your investing and budgeting choices:

1. Understand Your Net Worth: Simplify this task by looking at the big picture. It’s easy to get bogged down with details, but having a single, consolidated up-to-date view of your assets and liabilities not only aids in decision making, but also eases communication with professional advisors such as attorneys and CPAs.

2. Plan and Prioritize Goals: Once you successfully navigate plans for your retirement and your children’s or grandchildren’s educations, it may be time to consider next-level strategies like transferring wealth across multiple generations, succession planning for a business, or philanthropic endeavors. When planning your legacy, consider the family values you wish to preserve for future generations and be aware of how current spending patterns inform messages of financial responsibility to heirs. Family meetings can help to cultivate a governance structure and prepare heirs for any generational wealth transfer.

3. Manage Liquidity: As adults transition beyond earning regular paychecks, they may find significant funds tied up in artwork, real estate, or business partnerships that do not generate sufficient cash flow. This may require conversion of these illiquid assets into income-generating investments. Liquidity also is an important consideration in estate planning: illiquid assets can be challenging for multiple heirs to divide evenly.

4. Minimize Surprises: Many negative surprises to well-planned financial legacies are preventable with good decision-making. Just as pilots prepare for worst-case scenarios, these issues can be managed or avoided with good planning and preparation. The old saying goes, “Intellectuals solve problems, geniuses prevent them.”

Discussion and Education

In turbulent times, it can be difficult to remain rational and impartial about personal or family financial matters. In these cases, exploring potential positive or negative consequences can be helpful. As a wealth advisory firm, we assist clients in developing and reaching their unique financial goals through discussion and education. Together we develop, execute, and monitor strategies to meet designated objectives, financial or otherwise.

Ordinary people often find themselves in extraordinary circumstances, playing the role of a real-life hero who perseveres through chaos. Who knows – maybe one day they’ll make a movie about it with Tom Hanks starring as you.

Flight 2022 Ready for Takeoff: Simple Steps to Get Started

1. Locate the Exit Nearest You: Clear the clutter and trash unneeded documents.

2. Secure Baggage in Overhead Bins: File important documents and keep them accessible.

3. Fasten Your Seatbelts: Prepare for 2021 taxes and create a file for receipts.

December 31, 2021

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