Imagine for just a moment…
…you wake up one morning with a stiff neck. As the day progresses, the stiffness turns into a dull pain. The dull pain grows and grows, getting worse by the hour. You decide to see a doctor.
The first doctor you visit is a neck and back specialist. He tells you that he can realign your back and neck over a period of weeks and this will cure your ailment. He does ask you about your symptoms first, however. In working with him, he tells you that the natural state of human beings is sickness and that he will make you better, but you have to continue coming back to him every week for the rest of your life or your neck pain will return with a vengeance.
You’re not too sure about building a lasting and intimate relationship with your doctor and your illness, but the treatments do seem to be working as the doctor promised, and after several weeks, you feel like your old self again. The problem is that you are totally dependent on the doctor to keep you well. The moment you skip an appointment, your illness returns, and worse than before. Worse yet, you have no idea what is causing it. You only know that the doctor is able to, somehow, take away the pain and discomfort for you.
After a year of this treatment, you realize that you are a slave to your illness and that your doctor is more concerned with setting the next appointment than with making sure you actually get well again. What’s more, the treatments don’t seem to be as effective as they once were. But, you don’t see any other real options.
Eventually, you try a different doctor. He asks you about your medical history, spends a fair amount of time studying your lifestyle, then asks about your immediate symptoms. He recommends some drugs to take care of the immediate pain and discomfort, but also would like to see you discover the root cause of your illness. He does not operate on the premise that human beings need doctors in order to live a healthy life. Instead, he tells you that sickness is unnatural-but always a possibility and a fact of reality-and if you remain ignorant of it, it can ruin your life.
He helps you to understand what the underlying problem is, and you and your doctor work together to solve the fundamental problem. In the process, you learn a great deal about human biology and that living a healthy lifestyle and correcting your poor posture can prevent the very illness that you’re experiencing. After several months, you are totally cured, and have gained a deeper understanding of the problem you were having. Moving forward, you are certain you’ll never have to deal with this issue again.
Most financial advisers are the like the first doctor in the story. They’re happy to help you, but they keep you dependent on them. You never really learn anything, and you’ll always have to keep coming back to them, paying them more and more money, just to stay “afloat” in your savings and investment plan.
If you need help with goal setting, budgeting, or college planning for your children, things could get very expensive, very quickly. Now, think about this for a moment: what kind of financial adviser would you rather do business with?
If you’re happy being dependent on your adviser, then I’m afraid that you’re doomed to a life of mediocrity. I’m sorry, but you’re going to become just another helpless dependent. The sad reality about this is that you could end up with a Bernie Madoff (remember the well-respected investment adviser who scammed investors to the tune of $65 billion?) type of financial adviser, but you could also wind up doing business with some schmuck who just doesn’t know what he’s doing and won’t be honest with you about it until it’s too late. Even worse, you could end up with someone who’s honestly convinced he knows what he’s doing when, in reality, he’s clueless.
If you’re like most people, you don’t really want to remain ignorant. You do want to have a better understanding of your finances. You’d like to make better financial decisions. You don’t really want to leave all of your money in the hands of someone you don’t know all that well and hope that what they’re telling you isn’t just a bunch of B.S.
The problem is: where do you start?
Financial planning can become very complicated very quickly. Unless you’re considering a career change, you probably want a simple solution that gives you some kind of certainty about your future. You probably also want something that actually works.
It’s not about retirement planning…
It’s time to call out the elephant in the room. For years, “financial planning” has secretly meant “retirement planning.” Financial advisers give lip service to the idea of teaching principles of budgeting and saving money, but when is the last time a financial adviser came to your home and actually helped you do any of that? Chances are, you had to figure this out on your own. You had to fumble, and trip, and fall all over yourself before you figured out how to manage your own financial affairs.
You went into debt, you got out of debt. You went back into debt again. Maybe you went back into debt and you’re in so deep that everything seems hopeless right now. Maybe your dilemma is over not having enough savings. Maybe you’re worried about the economy, or about how you’re going to survive when you grow old.
Your financial adviser should be able to help you put things into perspective. He should be able to teach you principles of financial planning so that you can overcome any financial problem you’re facing. He should teach you about budgeting, investing, saving money, insurance, and how to make rational financial goals. He should show you how to develop a productive purpose in life if you’re unhappy with your chosen career. The sad fact is, though, that financial planners just don’t that. All they do is show you how to retire comfortably, and they can’t even do that because:
You and your adviser cannot predict the future!
You can’t predict future inflation, equity returns, and taxes. You can’t predict your own death. But, all of these things are absolutely necessary for traditional retirement planning to work. So, what exactly is your financial adviser doing for you when he does “retirement planning?” That’s a good question…
…what is he doing?
The low-down on how financial planners dispense advice
The industry focuses heavily on how advisers get paid, and they get you to focus on that too, rather than focusing on how advice is given and the quality of the advice. Getting you to believe that one compensation method (i.e. fee-only vs commission-based) is superior to another is part of a very sophisticated sales pitch.
While there are many different compensation models out there like commission-based financial advisers, fee-based financial advisers, and even fee-only advisers, there is really only one method that has really dominated the financial planning industry and that method is what I call the “authoritarian model.”
The authoritarian model dispenses advice like this: You hand over your financial data to the financial adviser. You also develop some goals based on a purpose he has already laid out for you (i.e. retirement). He runs his data through various computer software programs or does some other method of analysis. Then, he gives you recommendations and tells you what to do. Sound familiar?
There are a few problems with this approach:
- It takes motivation out of the equation. Your adviser is choosing your life’s end-game – not you.
- Any goals you do make are oriented around lifestyle, instead of purpose, which is a huge mistake and one your adviser usually never corrects or teaches you about.
- Your adviser provides automatic answers which do not require you to think about your long-term financial problems, the validity of the advice being given over a span of 20 years or more, and the probability of success given your deepest values.
- Because the adviser is assuming an authoritarian role in the client-adviser relationship, you’re never asked the deep, introspective, questions that will ultimately help you achieve meaningful goals directed towards a purpose you are most passionate about.
- Your adviser may be more focused on selling you financial products than helping you achieve your financial goals.
- Even if your adviser doesn’t sell financial products, he is “catching a fish for you,” instead of “teaching you how to fish.” You become increasingly helpless and dependent on him to manage your finances, and increasingly unable to think for yourself in the realm of personal (or business) finance — very dangerous.
What makes my advice different?
Financial planning cannot offer a one-size-fits-all solution to everyone’s problems, so I don’t pretend to have a template answer that will fit for every individual in every situation. Each person grows up with different values, likes, dislikes and personal preferences. Because of this, each person will end up having a different purpose in mind when creating a financial plan.
The truth is that there is so much more to financial planning than a vague notion of “retirement,” and this is where I may be of value to you. When you do business with me:
- You get a one-on-one phone (or in-person) consultation
- A systematic approach to financial planning. You and I will write down a central purpose for your financial plan, make firm goals, and write out step-by-step instructions on how to achieve those goals. We’ll get very granular.
- I’ll provide you with practical answers and solutions. I’ll also teach you the principles behind those answers and solutions. This way, your dependence on me actually decreases over time.
- If you need additional help after we’re done working together, we’ll schedule additional sessions as needed. Otherwise, I’ll encourage you to continue the financial planning process on your own so that you can meet all of your financial goals and dreams in life.
Why not do nothing?
The cost of doing nothing is substantial. If you have no goals but you have a purpose, it’s like having just a dream without an action plan. A road map without a road to drive on. That dream will never be fulfilled, and your full potential will be wasted. Having goals without a purpose is also meaningless. It’s like driving down a road without knowing where you’re going. You have a road, but no map and no destination.
If you don’t make rational goals, and you don’t have a defined purpose for those goals, then you’ll ultimately run into a dead end: imagine retiring from work, feeling like you haven’t really accomplished anything in life but not knowing what there was to accomplish in the first place. Doesn’t sound very appealing, does it?
- don’t have any defined central purpose and goals or;
- you’re not meeting the goals you do have
then contact me. I can help.