The road to financial success is paved with good intentions. We all know intellectually and appreciate how Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” We create goals and objectives, but habits and attitudes get in the way.
Think back when you were a child and you were about to go to your first day of school. How did you feel? You may have been filled with angst and fear as to what would actually transpire. So there may be fear of the unknown that comes with new experiences. How we kept our room, did our school work, kept track of records and information all set the stage for our adult financial planning habits. Even your annual April income tax pilgrimage of collecting your financial data reminds you of those acquired habits of dealing with financial matters. This tax preparation scenario may exacerbate your sense of frustration and angst by adding the dimension of fear of missing the deadline.
So what is all of this preliminary conversation leading to? What does this have to do with September? It appears that our lives are in sync with the school calendar. Summer has been a time to vacation away from responsibility, so September is charged with a get-back-to-work mentality. Rather than dread this, embrace this time of year. Incorporate a new habit of fiscal responsibility into your life now without applying pressure to your daily routine. Understand that there are obstacles that are physically, behaviorally and inherently in the way, but you can choose a financial partner/coach to make the journey an integrated life-planning experience.
Meet with a bona fide wealth manager. Who is that and what is the process? Wealth management is an investment advisory discipline that incorporates financial planning, investment-portfolio management and a number of aggregated financial services. High-net-worth individuals, small business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate estate planning, legal resources, tax professionals and investment management. Ideally, you are looking for an all-inclusive and objective wealth management company.
Financial planner, broker, wealth advisor … they all sound the same. How do you choose?
Look for an individual or firm that agrees to work in a fiduciary capacity. A fiduciary agrees not to put his interests before the duty to serve you. The fiduciary duty is the ultimate standard of care, and a fiduciary agrees to eliminate potential conflicts of interest in the relationship. This standard is in opposition to the suitability standard used generally in the brokerage and financial services industry. Suitability obligation by members of the broker/dealer community dictates the representative has to reasonably believe that any recommendations made to you are suitable to you in regard to your financial situation. The representative’s loyalty is to his or her firm, and that person is not obligated to disclose conflicts of interest.
Uncover how the professional is compensated.
When it comes to compensation, there are basically two groups: fee-only and all others. Innovative firms have introduced an annual flat fee retainer working agreement in response to the age-old ambiguity that has prevailed in the financial industry relative to how advisors are paid. These new pioneering wealth management companies have eliminated from their vocabulary all of the jargon about percentage of assets under management (AUM) charges and commissions charged on implementation. The retainer is achieved by determining the client’s desired scope of services, complexity of personal and/or business situations, and other qualitative and quantitative data. Transparency and disclosure are at the root of their relationship with you.
Be prepared for that visit with your wealth manager. Begin to identify and accumulate two types of data — quantitative and qualitative. The quantitative data can be easier to retrieve, such as assets, liabilities, cash flow, employee benefit statements, estate documents, buy-sell agreements and the like. You may experience some angst if your personal filing system is not quite up to date.
The qualitative data resides in our intellect and our hearts. What is your personal purpose, passion and legacy goals? You as a client also bear a responsibility in the life planning process — particularly if you long for a future that looks very different from your current reality. Like all strategic goals, the more time you have to take risks and plan, the better your odds are of achieving long-term success.
The wealth management process is really a life-planning passage. Answers to these qualitative questions will help identify the drivers in your financial life-plan. Wealth management and life planning are much more than just dollars and cents. Typically, people expect dollars and cents to dominate conversations they have with a wealth advisor, but when it comes to life planning, topics of discussion extend to matters far more personal than money, addressing your deepest life dreams and goals — and how to make them a reality through sound financial planning.
The life-planning experience takes you to new dimensions of goal accomplishment. We have focused so much on goal-setting; the life-planning process focuses on goal accomplishment.
Robert A. Valente, CFP®, AEP®, is CEO and Managing Member of RAV Financial Services LLC. He can be reached at email@example.com.
Insights Wealth Management is brought to you by RAV Financial Services LLC.