Real financial advisors are the release valve for their clients. But that valuable service comes at a personal price, often both physical and mental. That’s why it’s so important take time for ourselves to reset, that we leave a little slack in the system. To do so means we need to redefine what “work” means for a real financial advisor.
I’m getting more questions about what this election will mean for people’s personal financial situations than I’ve received in any previous election that I can remember. Financial advisers almost twice my age tell me the same thing. While I’m sure there are many reasons for these questions, I submit that the primary one is this: Our collective anxiety around money has never been higher. People are scared, and at the root of that fear is money (or the lack thereof).
In June, I wrote a column for the New York Times that focused on the concept that dealing with money is both an art and a science. We see this play out in what I’ve referred to as spreadsheets and stories. Today, I wanted to share with you how you can help your clients navigate both the spreadsheets and the stories they tell themselves to relate to money. It’s one of the things that separates real financial advisors from algorithms.
A lot of people describe their home as the best investment they ever made. We know the numbers make that a bit of a stretch, but it’s understandable. Owning a home is one of the few “investments” that we hold on to for 30 years without constantly debating whether we should sell. It’s much harder to stay that committed to investing in equities. One option is to buy boring things.
Money is an interesting actor that plays two roles in our lives. In the first, money equals money. It fits in a spreadsheet. It’s something to be calculated. In the other, money equals stories. It’s what we tell ourselves about our relationship with money.
After real financial advisors have done the hard work of building a well-designed portfolio, one of the best things we can encourage our clients (and ourselves) to do is … drum roll please … nothing! I know it sounds counterintuitive until you consider Warren Buffett’s perspective on investing: “Benign neglect, bordering on sloth, remains the hallmark of our investment process.” However, it turns out that doing nothing can be really difficult.
For a long time the mutual fund or the bond was the product. Then it became the financial plan. Today, real financial advisors understand that the value we really offer is acting as a co-pilot in the valuable process of financial planning. Things will change, and you have the tools and skills to help navigate those changes.
There’s a false sense of precision in the finance industry, and it’s start with the financial plan. It’s no wonder clients struggle when we ask them where they want to be in 20 years. Who know what will happen between then and now? But a guess, on the other hand, is whole different tool.
When most people celebrate anniversaries, they do something for themselves. But Tadas Viskanta at Abnormal Returns isn’t most people. To celebrate the 10 year anniversary of his amazing blog, he’s launched a limited edition t-shirt, and for every t-shirt sold, he’ll donate $10 to charity: water.
It can be a struggle to feel peaceful when it comes to financial decisions, both before, during, and after. There have been times when I’ve gotten caught up in rehashing a money decision I’ve made. As a result, I’ve missed some amazing things along the way. But it doesn’t have be that way. Real financial advisors can help people find some much-needed peace.