Last month my family and I visited warm, sunny Palm Springs. The days were beautiful and the evenings were cool. While my boys swam in the pool and floated around the lazy river, I enjoyed some quiet time with a book that I’ve been meaning to read for a while, Carl Richards’ The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money. Carl is a Financial Advisor from Park City, UT and his book centers around encouraging people to focus on long-term success and the importance of planning. It was a quick read with many engaging stories from Carl, and well thought out points; which were important enough that I want to pass them along to encourage you, as well as communicate the value of ongoing planning and goal setting.
I consider it a privilege to work with our clients, friends, and families as they put together their financial plan. I enjoy hearing stories about vacations they’ve taken, families they’ve raised, their hobbies and day-to-day adventures. These pursuits of joy and adventure are the things that make up our lives. Through self-reflection and prioritizing our time, we live intentionally. Richards takes the same outlook throughout his book, he frequently notes that “financial decisions are almost always life decisions” (pg 64).
Our goals are not to keep up with the Joneses or to find the perfect investment; our goals are to live a life that allows us the freedom and opportunity to do the things we want with the people we love.
Richards will often challenge his clients with insightful questions such as “Imagine you were financially secure. How would your life change? What would you change?” He also presses clients about what they want to accomplish in their lives: “Imagine a doctor tells you that you have only five to ten years to live – but you don’t feel sick. What will you do in the time remaining?” Or “Imagine a doctor tells you that you only have twenty-four hours left to live, what feelings arise? What did you miss?” (pg 71). Probing questions like these seek to filter out the noise in our lives and help us determine those things that are most important to us. Instead of focusing on portfolio growth and investment returns (although these are very important), the real discussion is about quality of life, providing for the ones we love, and living out life experiences.
With the twenty-four hour news cycle, constant headlines and social media, we are bombarded with information. A majority of this information invokes an emotional response, which causes us to make rash decisions based on something we’ve just seen. So we react based on emotions, only to have the stock market barely budge and all investment discipline go out the window, because as Brian Lockett often points out, “Fear is a greater motivator than Greed”. It’s good to remember that sensationalism sells, and that the news media is in the business of increasing viewership so they can charge advertisers more. If we have a long-term perspective, it’s often best to turn off the TV and put down the news article. We can’t control events happening in Syria or China or even Washington D.C., but we can control our personal economy, we can work harder, save more, put together a monthly budget, exercise more, invest time with our loved ones, and so on. When a client asked Carl Richards why he doesn’t pay attention to the daily movements of the stock market, he explained, “I help people make smart decisions about money so they can build and protect their wealth over time…this work doesn’t require [him] to care about what the market did today or where the market will be in the future.”
“I help people make smart decisions about money so they can build and protect their wealth over time.” – Carl Richards
Keeping a long-term perspective and minding our own economy sounds nice, but how do we do it in practice? Much like an airline pilot keeps on course during a flight, we start out with a general idea of where we’re headed, and as life happens, we make slight course corrections along the way. As Richards points out, “Financial Plans are worthless, but the process of financial planning is vital.” (pg 96). A financial plan is simply the output of a model based on dozens of assumptions. If we make a plan when we are 40 years old for retirement, and never go back to examine where we are in relation to that plan, then we’ve done ourselves a disservice. At CWM we believe that “planning is a verb” and it is to be done on a regular basis. As we’re fond of saying, we can’t control the wind but we can set the sail. There are also quite a few assumptions that have to be made during the planning process, so we make course corrections as life changes. Our goal is to align our advice and recommendations specifically to your situation, so that we are always offering meaningful and actionable advice to help you achieve your goals.
There is plenty more to Richards’ book than I have summarized here, he discusses the emotional attachment we have with certain investments, he pokes fun at magazines that offer financial advice, and he rightly points out that “simple” does not always mean “easy”, because a simple solution often involves working hard and staying disciplined.
So what? Most of this information is not new to you; most of this is information that we already know, so why spend time discussing it? It stems from an internal motivation I have; a passion of mine is to leave the world a better place than I found it. I strive to help people become financially free: confident in their decisions and excited about their futures. Financial freedom changes lives; it reduces stress, mends relationships, and leaves a legacy to the next generation.
Comprehensive Wealth Management works to ensure your financial success; we do that by aligning our vision with yours, making your goals our goals, providing disciplined money management and thoughtful financial advice, all the while treating our clients with the utmost respect and service.
Your future is too important to leave it up to the whims of Wall Street. If you would like to discuss your personal situation and develop a plan for the future, we are always happy to schedule a time to talk.
All the best,
This article has been prepared and distributed for informational purposes only and is not a solicitation or an offer to buy any security or investment or to participate in any trading strategy. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. For specific advice about your situation, please consult with a financial professional. Past performance is no guarantee of future results.