Financial Experts Give You Bad Advice

Our society is set up to deliver bad financial advice.  Here’s how you avoid it.

If you’re building a house, you need to have several specialists all working off of the same plan, the blueprints, in order to build things correctly. You’ve got your framers, your roofers, your electrician, floorer, trimmer…they are all specialists who know their craft and know it well. They all need to be working in unison, off of the same plans…you can’t have your kitchen specialist put in a 10-foot island if you only have room for a 4-foot island, right? Your floorer would have no idea how much hardwood or carpet to buy if they didn’t know the plans, the square footage, and the layout.

Why isn’t your financial life set up that way?

I’ve been having some unusual minor health issues, in my hip, my wrist, my elbow, my back.  So they sent me to a hip orthopedist, and then a hand and wrist orthopedist, then they said maybe it’s rhemortological so go see that specialists. I’ve been getting the run around to each of these specialists and don’t have any answers yet. None of these specialists are on the same page and working together. So if I were to ask you the best place to go to figure out abnormal health issues, you’d all say the Mayo Clinic right…and it’s not because they have better doctors. They obviously have great doctors, but so are the specialists that I’ve seen. The difference is the team approach at Mayo, they are all working together to analyze and build one diagnosis and treatment plan, and that results in better outcomes.

Why isn’t your financial life set up that way?

When you go off to college and you’re trying to get a degree in engineering or some other technical field, do you just have one teacher who covers everything, like they do in elementary school? No, you have experts that each teaches you their specialty, but it all is coordinated. You’re not taking Biology 401 as your first class in college.

Why isn’t your financial life set up that way?

I could go on, but let me give you one other example. This one illustrates how society has set up financial advice.

If you wanted a car, and not just any car, you wanted the best car. So you did your research, and you got a BMW engine, Porsche suspension, Ferrari body, the doors of a Dolorean, and the technology and dash of a Tesla. You went to each of those experts and got the very best, however you couldn’t even drive that thing! Those parts wouldn’t all fit together. 

You wouldn’t do that, right? You wouldn’t get a car that way, but that’s how our society is set up to deliver financial advice. It’s a terrible model. 

You’ve got your bank relationship, you’ve got your insurance agent, you go see your CPA to get your taxes done or maybe you just do it yourself. You have a guy or gal that helps your company with your 401(k), but then you have an IRA with someone called a Financial Advisor, but they really just manage the investments in that account. You maybe have your own Vanguard account too that you’re managing, and then there’s that one time where you saw an attorney who created a will for you, or maybe you went online and got that done.

That’s how it’s done, and that car doesn’t drive! Because you’re the one that’s supposed to put all of those pieces together and they don’t fit right. Each of those areas has their own agenda, their own “plan” if you will. Your insurance agent wants you to buy as much insurance as possible, and you want to pay as little as possible. The person who manages your IRA might be trying to sell you something, or tell you what is best for that piece of your financial life, but they don’t know how it fits with anything else. That bank wants you to borrow as much as possible and wants to pay you the least amount of interest.

All the while, you’re trying to fit all of those pieces together to see how much house you can afford, whether you’re doing what you need to do to retire someday, pay the least amount of tax over your lifetime and maybe your kids lifetime, and be set up so that if something happens to you or your wife the family is taken care of.

You can’t answer those questions and get clarity and confidence in your financial life with disconnected pieces. Working with all of those experts each with their own agenda means you have five or six or more “plans”, but you really need all of those financial experts in your life to work in unison, to be working off of one plan. This is how it works when you build a house, when you’re trying to find a car that you can actually drive, when you need the best medical care, or when you’re trying to learn something or get educated. That’s how it’s supposed to work, with one plan.

So how do you get that? You need a Certified Financial Planner™, who is a fiduciary, and who is doing Comprehensive Financial Planning with you, in all 6 areas of your financial life. Not someone who just helps you with investments who calls themselves a financial planner. Someone who is actually helping you in all six areas of your financial life, analyzing each area and how they interrelate and then giving advice based on that synergy and working with the other experts in your life to carry it out.

Your present financial position is connected with your insurance and protection plan, which is connected to your tax plan, which is connected to your investment strategy, which is connected to your long term goals like retirement and maybe college, and that’s connected with your estate plan. All six areas are connected, and I would argue you cannot make a great decision in your financial life without looking at how that decision impacts each of those six areas.

That’s how it’s supposed to work, and sadly our society and the financial services industry is not set up for that. But, there are a few firms that do it and thanks to technology, no matter where you live, you can work with a Certified Financial Planner™ who actually does Comprehensive Financial Planning. My firm does exactly that, we call it One Plan, and there are several other great firms across the U.S. who do it as well.

So if you feel like your financial life is disjointed, disconnected, and you have multiple professionals but none are working together, you need the clarity, confidence, and creativity that comes from working with a Certified Financial Planner™ doing Comprehensive Financial Planning, which we call One Plan.  

Alright! Until next time, go out and take your next wise step in your financial life.