Transcript

Wiser Financial Advisor – Speaking Your Language

Hi everyone, welcome to the Wiser Financial Advisor show with Josh Nelson, where we get real, we get honest and we get clear about the financial world and your money. This is Josh Nelson, founder and CEO of Keystone Financial Services. Let the financial fun begin!

Financial Lingo and Clarity

Today we are talking about financial language and the importance of financial clarity. Financial advisors need to speak your language but oftentimes we don’t do a great job of that. I’ve been doing this for 24 years and a lot of people think that my job is to crunch numbers and come up with financial strategies for financial planning. Well, that is 100% accurate! But in addition, one of the most important skillsets that a financial planner or wealth advisor or financial advisor can have is to be able to communicate. We need to be good communicators, and part of that is listening really well. Listening is more important than speaking. We need to listen and understand to make sure we are customizing what we’re talking about to a particular person’s needs and situation. We need to speak a language that makes sense for them.

I read an article in Forbes back in August by author Tim Moore. He is a wealth management advisor, and he challenges the status quo and advocates for translating financial planning language into a language that we can all understand. And that’s particularly important for people that are not financial experts. Most of the people we talk to and work with as clients are not financial experts, which is why they’ve come to us. They know that we’ve been trained. And part of that training is in communication, so we understand terms like tax planning, investment planning, insurance planning, retirement planning, estate planning. Tim Moore mentions that all this terminology can mean different things to different people. Really, the whole point of this is that these are things we need to be aware of, so we can apply them to our own situations.

We also need to figure out what it is that we want. We need to figure out where we are today and where we want to go, and figure out what the obstacles might be is to getting there. That’s my job as a wealth advisor or financial planner. We use those terms interchangeably, but a Certified Financial Planner (CFP) is going to be the industry gold standard. That’s what you want to look for when you’re interviewing people. Make sure that you ask about that.

Four Pillars of Personal Finance

One thing that Tim Moore asks is: How do we bridge the gap as far as language goes. And so his article has a different approach. Instead of having labels such as estate planning, he says that you can break it all down into four objectives, four pillars of personal finance.

Live
Protect
Grow
Give.

Let’s go through each one of those briefly.

Live is what most people are doing. We’re pretty good at that, right? We’re planning our vacations; we’re buying vehicles; planning for our kids’ activities. Whatever it is that we’ve got going on, we work to make sure that our presence is secure; that we have steady income, employee benefits—all the normal stuff that we’re dealing with on a day-to-day basis.

Grow is the approach for income in the future. People don’t just invest to invest, right? Most people don’t just invest because they think it’s fun; most invest in things they can grow because they want future income off those assets. So, growth is important for people who care about their future and who want to secure their income, not just today but down the road, and get financially free. We often talk about getting to financial freedom. Often, people don’t really want to retire, but they do want to be financially free as early as possible. And of course, my job is to help get there ASAP and then stay there.

Which brings us to Protect, which is safeguarding your family, your lifestyle, your assets. It’s taking care of the Ark. It’s about protecting and building that Ark well ahead of time. Hopefully we don’t need it, but it’s wise to safeguard these things that are important to us and our families going forward.

Lastly, Give. What we mean by this is giving to people, giving to causes we care about. When we say giving it doesn’t have to be money. It could be giving our time. Could be giving experiences. Oftentimes our clients will say, “You know what? Our kids are fine. We don’t need to give them any money, but we’re gonna take everybody on a trip to Disney World.” Or “We’re gonna take everybody on a cruise.” They go for a destination experience to get the family together. This creates shared memories, and funding these experiences is their way of giving back to their kids, grandkids, family, and creating a legacy.

Financial Advisor Experience

During the years I’ve been doing this work, I’ve had thousands and thousands of conversations. That’s another important point to consider when you are deciding who to work with as an advisor. You probably want to work with someone who’s got their 10,000 hours In. And 10,000 is the number they say it takes to really understand what you’re doing and become an expert. Usually that equates to about 10 years of experience. That is not just book knowledge, but actual experience. And certainly, in our field of finance, a lot of that is communication—not only communicating information, but also taking the time to understand and make sure we really get it and that you get it when it comes to what you want. We get very clear on where you are today and where you want to go. Then my job as an advisor is to use all the tools and strategies, everything out there to overcome any obstacles, especially if you’re not quite on track.

Timing of the Four Pillars

We think about those four pillars: Live, protect, grow and give. Pretty much everything does fall into one of those categories. For example, under the Live category, Tim Moore mentions that living is about today. That’s about managing cash flow, managing your budget, planning your career, your benefits, the things that are uppermost today. So financial planning is not all about tomorrow; it’s also about today and making sure that you’ve got the means to be able to support your current lifestyle.

Grow. That references a lot of things financially, such as various equity investments, real estate investments, optimizing your portfolio, asset allocation. Yeah, here I go with the financial terms. They’re important for your financial experts, your fiduciaries, to understand. Then they need to be put into language that makes sense to you. Why are we doing this? What’s the point of investing? It’s about the future, and I would suggest that really most of growth is about future, either for you or your loved ones.

Protect. Now we’re talking about things such as emergency funds, purchasing life insurance, long term care insurance, property and casualty insurance, things to cover “what-ifs”. Again, that’s our Ark, right? Building that Ark and building it while things are good. You don’t have the opportunity to build an Ark once it starts raining, so we want to do that well in advance. Also, this category is about strategies for education planning, estate planning, charitable giving. These are topics we talk about with our clients on a day-to-day basis.

All four of those things are things most people want to cover. That starts with your life today. Then, you want plan for the future. You want to protect what you value. You want to be able to give back, too, because there is great satisfaction in contributing. Some of the people that have the most joy in their lives, especially older people, are ones that are very generous, not just with money, but also with time, energy, passion, resources. They’re really giving people and usually pretty joyful people.

Where You Are and Where You’re Going

So when you’re thinking about your financial life, think about those four categories. Ask yourself, “What do I really value? What’s most important to me?” Now more than ever, there’s just too much information out there, and that information overload results in confusion. People get confused by all the financial jargon that just isn’t part of their world. You’re probably coming to us because it’s not your world, and so it’s important that we speak in a language you can understand in simple terms. You don’t need to worry about all the information terminology. Just think about what it is that you want and what are the resources. Today, that takes a lot of work right there.

Figuring out where we are today is important and then figuring out the future—there is probably some math involved with that. You may not have thought through what you want your retirement or your financial freedom to look like, so we certainly need to spend some time doing that.

This approach hopefully demystifies a bit of the financial world. If you’re somebody who maybe hasn’t started or maybe you know somebody who hasn’t started their planning; maybe they’ve been doing a good job over the years paying their debt off and putting money away. Maybe they’re a really good saver, putting money into their 401K for years. More often than not, when a new client comes to us, they’ve never worked with a financial planner or wealth advisor. They’ve never worked with anybody before, but usually people say, “We feel like we’ve done a good job. We’ve really built up our wealth and built up some resources. So number one, we don’t wanna screw it up. We know there’s probably not time for a do-over at this point. Number two, we really can use some help. We want to optimize what we’ve got, making sure we’re making good decisions—especially when it comes to the proposition of someday not working.”

Not working is a whole other ball of wax, right? The financial security that people feel from a paycheck goes away. We’ve got to rely on our own financial situation; possibly some other stuff; maybe some pension and Social Security and so forth, but for the most part it’s our own savings, our investments, our resources that we’ve built up over time that we’ve got to manage. Most people are correct that there is no do-over. Most people are not going to get a chance to completely rebuild their financial situation, simply because they don’t have enough time.

Financial Coaching

If you are in that category or if you know anybody in that category, have them come talk to us. Have them talk to a Certified Financial Planner. I’m happy to visit with people, whether they do business with us or not. I’m always happy to have those conversations, especially because a lot of times it’s helping people get clarity and figure out where they want to go.

We are financial coaches. The best of the best of athletes or business leaders all have coaches, people they rely on to help them see what they don’t see. Because if you’re, say a professional golfer, you can’t see yourself swing. That’s why these people have swing coaches. They’ve got other people to help make those adjustments and see how it’s progressing over time.

So I hope that was helpful. As financial planners, it is our duty to communicate in a language that makes sense to you. And we’ve got a broad array of clients. We’ve got people that are senior level chip design engineers at big companies and people that are plumbers and self-employed and everything in between. Our job is to communicate with you and help you make some great choices about finances.

Thank you for joining us on the Wiser Financial Advisor podcast. Proverbs says that the wisest thing we can do is seek after wisdom, and so that is what we’re doing and what we aim for in this podcast. Please share this.

I appreciate your help. Have a wonderful week and God bless.

We love feedback and we’d love it if you would pass it on to me directly at josh@keystonefinancial.com . Also, please stay plugged in with us, get updates on episodes and help us promote the podcast by rating us and also subscribing to us at your favorite podcast service.

The opinions voiced on the Wiser Financial Advisor show with host Josh Nelson are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine what may be appropriate for you, consult your attorney, accountant, financial or tax advisor prior to investing. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.