First, two points. One, I value the importance of sound
financial planning advice that all clients of financial practitioners should
receive. Two, I am not a financial planner.
However, the latter underscores my often stated premise
that when it comes to tax planning, insurance planning and estate planning I
have found in my career that recognized professionals in these fields are the best resource I have in my
business outside, of course, my own skills as an investment planner. The reason
is simple, the cacophony of simplistic phrases running from reaching your goals
to comprehensive holistic advice (sounds like something from Star Trek), are
the rallying cries of a generalist.
Now, to be fair, there are certainly many knowledgeable
and experienced generalists who bring much to the discussion of a client’s
planning needs. But our industry, who have begun to disproportionately cherish
education over experience in a manner that ignores the successes of the past
achieved by folks with far less than is respected in today’s intellectual
sandbox. I bring this up because every time a politician or and besieged
corporate head gives a public address there is usually a scholar nearby to lend
credibility to the point. And nowhere is this tactic more widely used than in
the world of finance. From the days when Wall Street was undermined by the so
called “Quants”, highly educated mathematicians fresh from their academic gigs
promising that their algorithmic (yes it’s use predates the 21st century)
models will provide answers to many of our industry’s most vexing questions
including when to buy and when to sell based on patterns of human behavior.
History has recorded how that experiment worked out.
It’s also important to understand that investment
planning is not enough and I know it. And the recent exercise of filling out
the risk tolerance questionnaire, along with talking with you is to better
understand your financial expectations, that through budget guidance and using
modest assumptions when attempting to predict the future, what I refer to as
overstating the debits and understating the credits, results in retirement
projections and a plan for how investing can get you there. That, I believe is
the cornerstone of comprehensive financial planning that doesn’t match products
to dreams. And when including insurance, tax planning and attorney provided estate
planning the likelihood is that most of my clients will never need all of those
services.
And each quarter, each year, we revisit important
milestones in your life, all aimed at helping you see where you stand and
identify any changes that can to be made going forward. The process for staying
on track needs to be flexible and ready for the unexpected, because the markets
and especially life, rarely are.
