What's the Common Bond That All of Our Clients Share?

What's the Common Bond That All of Our Clients Share?
  1. Will you make it financially?
  2. Do you know your financial blindspots?

These two questions form the backbone of our holistic approach to personal financial planning. These questions also are the common bond that all of our clients share.

If your financial life is arranged so that you can maintain your current lifestyle for the balance of your life, the noise of daily life dulls into the background.  On the other hand, if you haven’t fully prepared for future financial realities, the ups and downs each day bring new angst. Recognizing where you have financial blindspots can be vital to crafting a rational plan towards a secure financial future.

Many important questions in life, these two included, require that you step back and assess priorities. No one has enough money to do everything they want. If retiring with more income is a priority, then making a tradeoff with current spending, (so that savings can increase), has to occur. One of the most prevalent blindspots we see is an unwillingness to accept tradeoffs.

No one wants to run out of money. Trying to determine if you have enough to sustain your lifestyle until very old age is more than just a simple math equation. The persistence of inflation; the exact ordering of investment returns; actual spending; and how long you will live are all important factors. Since none of these are knowable in advance, ongoing planning and course corrections should be expected.

Most financial blindspots can be traced directly to behavioral biases. These blindspots directly impact how you perceive risk. From being overly optimistic (overconfidence bias), to overweighting information that support your beliefs, (confirmation bias), the psychological blindspots are many. Professor David Hirshleifer, a finance professor at UC-Irvine recommends what he terms “self-distancing” in order to make better financial choices.

This involves considering the opposite side of the decision as a way of balancing the biases. We call this “dispassionate discipline”, a core component of what we provide our planning clients.  We all have these biases as they are “factory installed”. The key is acknowledging that these biases exist so that you don’t unnecessarily hobble your long-term financial objectives.

Our primary role is to help clients understand long-term financial history and use that overlay as a tool for better decision making. Rational and realistic financial planning can’t be built upon a foundation of myths and misconceptions. In the end, your ability to deal with question number two likely forms the answer to question number one.

James E. Wilson

James founded South Carolina’s first fee-only financial planning firm in 1982 and is a pioneer in the financial planning field. He has advised hundreds of successful individ ... Click for full bio

Most Read IRIS Articles of the Week: April 17-21

Most Read IRIS Articles of the Week: April 17-21

Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, April 17-21, 2017 

Click the headline to read the full article.  Enjoy!

1. Market Keeping You up at Night? Look for the Right Hedge

Like so many others in the industry, I was wrong. For years, I was certain that the bull market was nearing its end. I thought the market was over-extended, and that, surely, the wild equities run was coming to an end. But everyone else was bullish, and perhaps rightfully so. And while I’ve watched equities continue on their spectacular rise, I do think now is the time (really!) to put a hedge in place. Here’s why. Here’s how. — Adam Patti

2. How to Manage Bond Market Pain and Seek the Gain When Rates Are Rising

The realities for fixed income investors have changed. How is this being reflected in markets? Bond investing has become increasingly difficult over the past decade. Markets have been heavily distorted by ultra-low interest rates and quantitative easing, as well as by extreme risk aversion in response to the global economic crisis and the eurozone debt crisis. — Nick Gartside

3. Seven Reasons You'll Fail as a Financial Advisor

Is being a financial advisor worth it? I am an optimistic person and I encourage other people to keep a positive mental attitude (shout-out to Napoleon Hill and W. Clement Stone). However, by taking a good, hard look at the negatives in life, we can successfully pivot towards the positive aspects that will help us achieve our goals. — James Pollard

4. The Secret to Turning Every Prospect into a Client

How do you treat one of your most valued, existing clients? Here’s a list of some things that come to mind. — Andrew Sobel

5. Why Do Clients Change Advisors?

According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home. — Julie Littlechild

6. Why You Should Focus on Getting Referral Sources

I was talking with an advisor last week about how to get into conversations about what he does. He was relaying the story of going jogging with a friend who could be a good client but is, more importantly, connected to a large network of people who fit this advisors ideal client description. — Stephen Wershing

7. How Big Picture Thinkers Seize More Opportunities in 7 Steps

Big picture thinkers are not unicorns - rare and mystical. And they were not born with the innate ability to think big. They do, however, pay attention to the broader landscape and take the time to think, analyze and evaluate. — Jill Houtman and Danny Domenighini

8. 5 Actions to Build Your Reputation

Your reputation is who you are and how you show up, Monday to Monday®.  Many of us take our image and reputation for granted.  Give careful thought to the kind of reputation that you would be proud of Monday to Monday® and that would resonate with your purpose and priorities. — Stacey Hanke

9. How Are You Poised to Begin Welcoming GenZ to Your Workplace?

The generational changing of the guard is a fact of life as old as time. Young replaces old in responsibility, importance, control and culture. Outside of the family, the workplace is perhaps where this is seen most regularly by most people. — Shirley Engelmeier

10. Are Price Objections REALLY Price Objections?

Next time you hear your prospects give you price objections, it’s not because of the price. The give price objections because they don’t know the full value proposition that they’d be paying for. And it’s not based on their need, or your features and functions. It’s based on the buying criteria they want to meet internally. — Sofia Carter

11. Understanding the Economic Value of Transition Deals

Last week we wrote about the economic rationale behind going independent vs. moving to another major firm as an employee. As a follow-up topic, we thought it prudent to analyze transition packages attached to big firm moves and peel back the layers of the onion to show the components of these deals. — Louis Diamond

Douglas Heikkinen
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio