Have you ever worked with a financial planner before? How was that experience? Hopefully, it was a good one. Even if you haven’t, you likely have an image of one. Nearly every person who I tell what I do conjure up an image of Wallstreet, unfortunately, some maybe even think of Gordon Gecko with hair slicked backed espousing a “greed is good” mantra.
They often confuse this profession with that of an investment advisor, and a bad example at that. Financial planning is not just about investing, though investing should be a part of the solution. The people managing your investments most likely are not financial planners. They may be a “financial advisor”, but they likely aren’t doing the same things we do. Let me quickly walk you through the difference between real financial planning and what everyone seems to think it is.
The truth is most people can benefit from sound financial advice. Saving, investing, and planning for the future can be complicated, and most of us need help making decisions on asset allocation, diversification, and retirement savings vehicles. I believe the work real financial advisors do change people’s lives.
Sadly the corollary is also true, fake financial advisors can destroy people’s lives. Fake financial advising is overwhelmingly interested in your investible assets and tie their entire value proposition to getting you a better return…something they likely have no control over. Or worse, they may view you as an opportunity to sell a financial product without regard if it is the right tool for your unique situation.
The work that real financial planners do is different. Real financial planning is really about meeting people directly where they are in their lives and figuring out how to ensure their success. Whether they are starting out in life right out of college or are already retired and trying to figure out how to live on their savings…or somewhere in between. Some have heavy debts due to student loans or regrettable financial choices, while some may have a recent windfall and want to know the best way forward. Most are trying to simply do the best they can and set aside money each month and wondering if they are doing the “right” things with their money.
Real financial planning is getting down to the level of the individual, or couple, and helping them figure out what their goals are and clearly defining their needs. It’s not me imposing my idea of a great plan, it’s us collectively figuring out the best way forward through a structured and disciplined process.
I do this by asking good questions and gathering data. I analyze the data and present a plan, but the plan is dynamic. Financial planning is about the process of distilling facts from assumptions, setting goals, aligning resources, identifying shortfalls, and recommending remedies that account for risk.
The reality is life happens along the way. Goals and ideals change, income and earnings fluctuate, taxes and returns ebb and flow. If your entire future is built around a static plan, you will likely fail. If your idea of a plan is tied to some abstract investment approach, you will likely fail. If you are more concerned about squeezing the very last basis point out of your investments rather than tying your investment strategy to your objectives and risk level, you will likely fail. If are willing to gamble your future by relying on stock pickers and market prognosticators, you will fail.
The true value real financial planners provide, is the financial planning process. With a process in place, when the variables change you don’t have to throw out the whole thing, rather you make the right adjustments and course corrections and move on. Financial Planning as a process removes crisis from the equation and prepares you for the branches that life offers.
I am often reminded of a great quote from Dwight D. Eisenhower, who as the Supreme Allied Commander attributed the role of planners in the following way:
“Plans are useless; but planning is indispensable”-Dwight D. Eisenhower
Find a real financial planner….you just might find the work we do is indispensable.