Does dieting work? I have a friend who claims it does. He points out that over the last 40 years he has lost more than 1,200 pounds. Impressive, but I suppose it matters how you define “works.” There are lots more areas of life where the definition of works matters.
In financial planning we see working as context.
Context is a key piece of the puzzle. Without it, anything, everything and nothing could all make sense. The first step in financial planning is determining your particular context. Who are you? What do you value? What do you need? What do you want? These questions create a template for decisions. They are the playing field for the thousands of financial tools and techniques that could be brought to bear in the hope of resolving your purpose.
Financial advisors of all stripes are “How” people. They have training and experience that allows them to find and implement an answer to a question. Sometimes people want the how answer before they know the question and its context. That seldom ends well, although in fairness it likely ends better than doing nothing at all. Just not good enough.
Tactical answers should be efficient. Time is a scarce resource, as is money. Most people have more wants and needs than their resources can satisfy. Efficient “how” answers let them solve more of them or solve them sooner.
Clients cannot afford to have random solutions to unexamined problems solved out of the context of other wants and needs.
A competent client needs several abilities:
- They know what they need
- They know what they want
- They know the timing
- They know the resources they can apply
- They know they are not the first to have this list and so can expect that answers exist.
This is the point where things go a bit astray. Sometimes they think it is easy.
No client has the time to discover all of, or even some of, the tools and techniques that might apply to their situation. Tools and techniques change because they are closely tied to the external environment of law, economics, government actions, society, psychology, and fashion. Even when a client discovers a tool, they cannot easily fit it to their situation. Synergy is lost and efficiency an afterthought.
Good plans, ones that work and last, are symbiotic arrangements of a client who knows their resources and hopes for the future, and tactical specialists who can connect the appropriate tools, at the appropriate times, for the appropriate price.
Subject specialists are great but they have a flaw. They don’t always see the whole context. Tax specialists see everything as a tax problem. Investment people see everything as a yield problem. Insurance people see everything as a risk problem.
“Never ask a barber if you need a haircut.”
Somewhere on your financial team you need a generalist. A quarterback. Someone who can understand and communicate with the client while holding the ability to direct and communicate with subject specialists.
Financial planning is a combination of art and science. Subject specialists tend to be scientists. Clients and generalists are more art. You cannot do it without both. The hard step is to find a capable generalist.
Do-it-yourself is near impossible to get right. Do-it-yourself sounds easy enough, but is actually syntactically incorrect. Properly, it is Do-Everything-Yourself, even the things you do not know exist. The costs are still there. Some change from fees to mistakes, or time spent doing things poorly with new and partially understood skills. Nothing is free.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772