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Do You Want Product “Solutions” or Real Financial Planning?

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Do You Want Product "Solutions" or Real Financial Planning?

We live in a world where cheap and easy “solutions” to almost everything abound. We go to the doctor and want a pill, rather than a program to improve our health. As an example, the weight loss industry in America generates $66 Billion annually by selling people “solutions” that mostly don’t work.

Contrast that with financial planning. The “-ing” on the end of the word denotes this is action oriented and ongoing, not something with an endpoint. Investments and insurance products are the diet pills of personal finance. They are sold on the basis of solving a particular problem. Unfortunately, these bromides usually have little or no good impact on long-term financial well being.

Financial “Unplanning”

You see, buying an investment or insurance product isn’t financial planning. In fact, in many cases it might be termed, “unplanning” because you often move away from, not towards, your desired outcome.

Studies by Vanguard and Russell Investments show that the most valuable components of financial advice are behavioral guidance and planning. Nonetheless, individual investors clamor for the shiniest investment products available, the most appealing “solutions” absent guidance and planning.

The Real Difference: Guidance and Planning

There are actually two distinct communities operating within the personal financial realm. Most of the people and firms are part of the sales and product community. This is the group that peddles these shiny product “solutions.”

The other group is comprised of firms like us who focus on guidance and planning. The essence of planning is to focus on your desired destination and then plot a course in that direction. An experienced financial planner can help you navigate through both calm and rough seas.

Related: The Disaster of DIY Investing

You Must Engage

A word of warning. My belief is that many individuals prefer products to planning because the product “solutions” require no engagement. That is, you just buy the product and move on. Planning demands some level of involvement. For financial planning to be impactful, you need to be actively engaged.

The common goal that everyone shares is to maintain their existing lifestyle and not run out of money. This can’t be “solved” by a product. It can be achieved by planning, if you are willing to invest the time and resources. The alternative isn’t pretty.

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