Broker Check

Financial Firefighting

April 30, 2020

I served the City of Bayonne, New Jersey as a Firefighter and more recently as a Fire Captain for over 20 years. I was on shift, just across the Hudson River from New York City, when terrorists flew planes the Twin Towers on 9-11-2001. Along with many other courageous individuals from my department, I volunteered to work at Ground Zero on the 12th, 13th and 14th of September, searching for survivors.

I did not find anyone alive.

From this experience and many others I can tell you firsthand that when the alarms go off in the stationhouse - we call them the chimes - first responders and front-line medical personnel have extraordinarily difficult decisions to make, under the most extreme pressure and with virtually no time to make them. We are trained to mitigate the expected, but also to retain a certain vigilance for the unexpected.

In the fire service, law enforcement, the military, as well as in fields like medicine and engineering, there is great attention paid to planning for the unexpected.
In the fire service, we are equipped and trained to escape from structures via windows, roofs, balconies, or by breaching walls, if we are cut off from more conventional means of egress by fire or a structural collapse.

Law enforcement officers wear bullet proof vests, despite the extra weight and heat retention, because it could save their lives in the rare instances they are needed. I have a hunch that all the police officers whose lives have been saved by their vests would say that any momentary discomfort was worth it. I am certain their families feel the same way.

Engineers often overbuild structures - that is, add strength and features above and beyond what would be adequate for everyday conditions - to withstand the extreme forces produced by earthquakes, hurricanes and tornadoes.

Thankfully, these catastrophic natural events are not the norm. To avoid tragedy, however, they must be accounted for in the design process. I know every time I drive across a bridge with my wife and children, I am grateful for their foresight and attention to detail. I, by training, actually think about this kind of stuff.

If you think about what takes place during surgery, it is astonishing that any surgical procedure could ever be considered routine. Yet owing to the skill and education of medical professionals, millions of surgeries are performed every year without incident.

Still, I have been told by clients who are doctors that they too have a playbook to go to if events during surgery do not go as expected. They train and plan for when things take an atypical turn. Thank goodness that they do.

In working with my clients, to help them realize their financial goals, I place great emphasis on preparation. I think of it as financial fire prevention. One of the principle reasons structure fires have declined by over 50% in the US since 1980 is the implementation of fire prevention and the fire codes, passed by legislatures, that make buildings safer.

Fire codes are construction requirements that are designed to make it less likely fires will start in the first place and less deadly if they do start.

Speaking generally, fire prevention is the periodic process of inspecting multiple dwellings and commercial structures, where there is high potential life hazard, to ensure that occupants are adhering to simple safety regulations. Some obvious ones include keeping flammable materials away from heat sources and making sure that entrances and exits are clear of obstruction.

The installing of sprinklers in a building that will house hundreds or even thousands of men, woman, and children, not storing oily rags and fuel containers near furnaces and keeping emergency exits clear of debris is easy to understand. Yet every year, for my two decades in the fire service, we inspected dwellings which had one or more of these dangerous violations.

I do not believe the reason for these potentially deadly situations is that property owners or occupants do not know or care about safety. I think it is because catastrophe happens just infrequently enough that we can be lulled into a false sense of safety. Events like 9-11-2001, Covid-19 and on a smaller scale, the recent death of basketball star Kobe Bryant remind us there is danger in the world still.

Believing that our gut, our horoscope or our favorite financial pundit will warn us of impending danger is magical thinking. These things have not worked with any predictable consistency in the past and there is no compelling evidence to suggest they will work reliably in the future.

Diversification is our only real defense against the unexpected and the unknowable.

How to go about diversifying? Choosing the specific assets that will make up our balanced financial mosaic, will be different from person to person based on a spectrum of needs and concerns; but not so many that we cannot get our arms around them.

The unexpected happens and we must be prepared for it. It is never too late to begin now. If the concept of preventing financial fires makes sense to you, consider speaking with a financial professional who has earned your trust and work with them.

Scott R. McGimpsey April 30th, 2020

This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Neither Cetera Advisor Networks LLC nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm. Securities offered through Cetera Advisor Networks LLC, Member FINRA/SIPC. Advisory services offered through Summit Financial Group, Inc., a Registered Investment Advisor. Summit and Cetera are affiliated and under separate ownership from any other named entity.