The easiest guy to mock at the gym is the one with huge biceps, a large neck and tiny legs. We all know that guy; the guy who inspired the dire warning to not skip leg day. In terms of my personal fitness goals, this is my nightmare.
I consider myself to be a comprehensive financial planner, but some of my friends think I am that guy. Many of them see me as the “stock market guy” and are always ready to chirp at me with their latest stock picks or recent “naked call option” strategies. Sure, investing in stock and bond markets is a large part of what I do and I enjoy doing it, but as someone who is focused on being a well-rounded financial planner, I want to be sure that the people I help are happy in all aspects of their lives; not just their portfolio’s returns from last year.
Making Six-Figures and Going Broke
So how do we keep clients happy and financially fit? I’m fortunate enough to be at a firm that does business in a couple of ways. The majority of the business takes a traditional route where we manage assets and give financial advice for an annual fee. But our other business avenue allows for a much wider client base; hourly financial planning. Under this model, we charge for financial advice at an hourly rate; similar to a lawyer’s billable hours. This is where I’ve learned the most about people and their attitudes about their money.
For example, in the San Francisco Bay Area, it is not uncommon for a dual-income family to have pre-tax income of over $300,000. Where I’m from in Texas, this would be considered an above average income and would provide extra breathing room for a budget. But in this high cost-of-living area it is very common for that same family to be cash flow negative AKA “broke” at the end of month.
While not everyone shares the same money attitudes, a surprising number of people will blame their inability to save for their own future on their below-average investment returns. In reality, the real issue is self-discipline in their personal spending and savings habits. The point of frustration seems to (irrationally) be on their advisor’s lousy investment performance.
Again, investment planning is definitely in my job description, and I’m glad to give advice on anything that will help my clients make more money. However, if you make $300,000 a year and do not have any money at the end of the month, there might be larger issues to address besides stock performance. Money management would be all too simple if the solution was always to change advisors instead of change behaviors.
Being Financially Fit
Investments-only financial planning is the equivalent of walking into the gym, doing some heavy bicep curls, chugging a protein shake and telling people “yeah, I work out.”
Getting in-shape takes a lot of effort – cardio, weight lifting, a healthy diet, motivation, and much more. If you’d like to work out more but are lacking the education to be truly fit, perhaps it’s time to hire a personal trainer to get you in shape and coach you along the way.
When it comes to your money, a comprehensive financial planner is similar to a personal trainer – we help you shape up your financial life. A true financial planner should give you much more than a good investment portfolio. Your advisor should talk to you about the whole picture; from cash flow and savings patterns to college expenses for your kids and your relationship with family members. I even like to know how my client’s feel about their work-life balance.
Work for It
If you have $200,000 and hire me to make you a millionaire via record-setting investment returns, I’m sorry, but I can’t reasonably promise you that outcome and you will likely fire me. However, if we begin our relationship with $200,000 and you are willing to let me coach you until you’ve reached your ultimate goal, I’m happy to take that journey with you as your advisor and coach.
Time to hit the gym now; its leg day.