How to Do Financial Planning

Automatic TRANSCRIPT

You hear someone share a logical view of disastrous things that could happen. We always have to step back and ask what other incentives. What is their business model? Do they have a newsletter that they're selling a subscription service? Are they selling books? That doesn't necessarily mean they have a conflict of interest, but we want to understand. What's their model? My model is I. Do a podcast and I have plus membership and one of the most important things that I do in that plus membership which I think, all individuals that are sharing their investment and financial views should do. Is Show their portfolio. Show me what you're holding in your portfolio. That's why this member could ask me. Why do I have so little invested in stocks which I'll get to in a few minutes? One of our challenges to figure out well. How do we potentially plan for catastrophic things that could happen, but may not and probably will not. I actually to a recent episode on the investors podcast with Luke Roman, and grant Williams. And one of the things that struck me is how frequently? They said they didn't know about specific things. They didn't know why. The dollar wasn't weakening or other events. Because we don't know. which gets to some of the shortcomings of traditional financial advisers? There are many terms for people that provide financial and investment advice, financial adviser, an inch of planner investment advisor. Is A lot of overlap? This member used the term financial adviser for the individual. He has had a relationship with for the past fifteen years. I'm not sure to what extent he's done. Financial Planning Buddies certainly has provided investment advice, which is what an investment advisor will do. Sometimes, financial planners provide investment advice. Now I am not a financial planner. I have never hired a financial planner I've managed assets for the clients of financial planners and I've spoken to many financial planners over the years and analyze the different financial planning software that they use. One of the smartest financial planners I know is a good friend of Mine Roger Whitney. He is the host of the retirement podcast retirement, answer, man and the agile financial planner podcast. Rogers spent more than twenty five years working with individuals over h fifty, helping them transition into retirement. Last December. He had extensive guest post on Michael kisses. Log Michael kisses is also a very well known financial planner. In that post, Roger contrasted traditional financial planning with what he has labeled agile financial planning. He described traditional. Financial Planning is where you ask the client to complete comprehensive questionnaires. And, then he says the visor takes the questionnaire up to the proverbial mountain, and eventually comes back down with the tablets, burdensome comprehensive plans often hundreds of pages long. And then the advisors sits down with the client for hours and reviews these binders and the recommendations and a multi step financial process. Then the client often takes these leather bound tomes as he said the plan and put it on the shelf. Check the mental box and ignore. Now obviously not all advisors do that. But that's often what happens. You Hire Advisor? They give you a plan, and then it becomes this document that sits there. He contrast that with Agile Financial Planning. True Financial Planning is no longer a product. It's a fluid. Never. Ending project focused on managing change. And the first principle is to accept uncertainty. To recognize as he writes financial planning precision does not equal more accuracy because the future is a novel. We talked about that last week. Investing is not knowing we just don't know. The basis of agile financial planning is to accept that we do not know. We're not sure what happened to markets taxes inflation. Our even our lives. And he mentioned that by accepting that frees up a lot of mental space that is focused on trying to predict accurately. What's going to happen in instead? We can focus on the new information that is coming as life unfolds and make small incremental decisions along the way. Little adjustments is how he puts it.

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