Broker Check

The 3 E’s: How We Help Our Clients

| April 01, 2020
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During an unprecedented global pandemic and historic market volatility, I've found some time to reflect on my place in all of this as a financial planner. Perhaps I can summarize how we help our clients in the following three ways: Education, Emotional Intelligence and Execution.

Education: What you Don't Know Can Hurt You
When information on the internet is free and infinite, it's difficult to know how to prioritize and apply it to your own unique situation. That's where we come in. There are a lot of financial gurus out there and most of them provide value on a variety of subjects. Simultaneously, many of them disagree. Furthermore, they are also trying to sell you a product or service without knowing you personally.

Our job is to sift through what's true and help you decipher what's a top priority and useful in your situation. For instance, if your 62 years old one of the key concepts you need to understand is the "Sequence of Returns Risk." For ten years, in countless client meetings, blogs and workshops we've warned of the dangers of market volatility for those taking income or about to start taking income. If your 42 and accumulating wealth, "Dollar Cost Averaging" is the bright side of market volatility. So the same market volatility that we are experiencing in March of 2020 is a long-term benefit for those with 25 years until income and extremely detrimental to pensioners who are unprepared.

In addition, to providing the right information at the right time to the right people, we must update our education as the rules change. In 2017, the Trump tax code changed the rules for Roth Conversions. In 2019, the SECURE Act changed the rules for required minimum distributions (RMDs) and inherited IRAs. A few days ago, the CARES Act changed the rules on RMDs and early distributions for a limited time. Keeping track of the changes and then applying them to your situation in real time while weighing the risks and rewards requires a multitude of counselors. In fact, we have advisors we turn to help us help you.

Emotional Intelligence: Motivation and Resilience
Have you ever seen a personal trainer yelling at his client to do one more push up? That client is paying their trainer to motivate them to do what they know they should do. While it's important to financially educate our clients, it's noting unless we can motivate our clients to do the difficult thing. And following a financial plan requires emotional intelligence: the ability to manage one's emotions. Having a "money coach" is about identifying when emotions override your ability to make the right decision.

It's easy to follow the crowd. In a rising stock market, the fear of missing out can lead clients to chase reward and ignore risk. Like a siren song, the 10-year bull market hypnotizes us to buy and hold the latest and greatest asset. It''s a tale as old as time. And now, in a time of unprecedented downside volatility, we motivate our clients to stay the course and trust the plan. It's counter-intuitive, but essential.

It's easy to follow your bias. As if group-think wasn't enough of an emotional drain on you, there's a problem with the way you think. Logical fallacies and bias plague investors in many ways. We have blogs and podcasts dedicated to understanding how winners and losers think. More importantly, we strive to point out the hidden bias in our knee-jerk reactions to go against prudent financial planning and rules-based investment strategy.

Execution: Delegate the Details
Our clients hire us to initiate the changes they need and maintain the course they're on. Assuming you are educated on the changes you need and motivated to make those changes, the devil is in the details. Overwhelmed by life's urgencies, the last thing screaming for your attention is initiating a change to your financial plan and all of the minutiae involved. And so, too often, great education and sincere motivation fades and the changes you need never get executed. That's where we come in. It is in our best interest for you to follow through on the changes we've recommended.

But a financial plan isn't about setting it and forgetting it. You start by planting a garden but you have to tend to it everyday.  I've hired a company to mow my lawn, trim the bushes and keep the sprinklers running. I don't have the time or desire to become as proficient as my lawn guy. I don't want to spend my weekends in the yard, I want to spend it by the pool with my family and friends. The analogy is obvious when it comes to rebalancing portfolios, harvesting tax losses and automating transactions. Delegate the details and get on with what you are uniquely called to do.

Epilogue
We help our clients in other ways as well, but I think the 3 E's above are like pillars that make it all possible. If there's a topic you'd like more education on, if you need motivation to get of square one or simply want to delegate the details, click here.

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