The Financial Planner

As a former financial planner I wanted to use some of my experience to break through some of the mistakes that many investors make when they put together a financial plan. Many believe that just getting a great “stock tip”, or just buying stocks is all you need to do in order to secure their financial futures. If they lose money they either blame their advisor (which sometimes is true), or take it as bad luck. In fact it has much more to do with investors not looking at their own situation more carefully, and thinking that any advice that sounds good can be useful for them.

Every investor is different. Some may be more aggressive than others. Some may be older than others. Some may have entirely different goals than the investors they are taking advice from. When planning for your future it is important to set goals and then working to achieve those goals with a strong financial plan based on YOUR goals.

Not everyone can take the risk of the stock market. Many investors actually have no business dabbling in the market because it doesn’t fit their goals, and they just can’t afford the risk of doing so. This is where goals, and sound financial planning come into the mix. What we try to do is minimize the risk and make sure that when things go really bad in the market, you aren’t going to lose as much as everyone else. There are many terms for such things, but the most common one is diversification and not putting all your eggs in one basket. This is what many investors do. Either from bad advice, or just not having the knowledge it takes to keep themselves out of very risky situations.

There are more aspects to a good financial plan than just the investments. A sound financial plan also takes risk, taxes, and specific financial goals into account. Humans have many life stages when it comes to money. That is why there are many more aspects to a financial plan than just buying some stocks, trying to make a nice gain, and then trying to get out at the right time. To me there is much more to it than that. Goal planning (Buying a home, College Education, etc.) are one aspect of planning that many don’t consider. It is all about retirement, and that’s it. What about risk? What happens when something happens? These are the questions an investment broker doesn’t really address. Not because they don’t know they exist, but many times it is because their brokerage house doesn’t offer the tools for them to cover them.

To me the major financial planning categories are: Budgeting, Cash Reserves, Goals that are not Retirement, Retirement Planning, Estate Planning, Long-Term Care Planning, Disability Planning, and all other forms of insurance that we either have to have, or that we should have.

Most investors don’t take into account emergency cash reserves, nor do they even have a budget! How can you even decide how much to invest when you don’t even know with a reasonable certainty how much money you spend, and where it is going?

Many people don’t like to talk about insurance because it has a bad name, and so do the companies. Regardless, when you need it, you are damn glad you have it. That is why it is a big part of any financial plan. It has also evolved so much that it can be used in some cases to help you invest, or even allow you to have more money when you retire!

Another thing that I intend to do is post about some things that financial advisors and stock brokers probably don’t want you to know about. When I was in practice I used to openly share my commissions with my clients when they were considering an investment. I felt it was a matter of respect to show the client what I was making on a service I provided. While doing this it allowed them to see whether or not I was raking them over the coals and just giving them advice based on what I was going to make instead of what was best for them.

There are many small things that brokers and advisors do to clients to squeeze a few more dollars out of the turnip. I will likely share some of those in future posts to give you a better idea about what kinds of things they do which are completely unnecessary, which I think I will label “Dirty Stock Broker Secrets”. Hopefully some of those posts will save you some unnecessary fees that brokers know you don’t know about.

As I mentioned before I am no longer a licensed financial advisor so all the topics I speak on cannot be taken as from a professional. Also, I want to make it clear that everything discussed here are guides, and DO NOT pertain to yourself as an individual. EVERYONE IS DIFFERENT. You must figure out what will be best in your situation, and not just take “tips” and running with them. I will also discuss some tax implications of certain strategies. Tax laws change all the time, and vary from country to country, or state to state, so even if it sounds great when you read it, make sure that you discuss any strategies you read here with your tax advisor. If you are unsure of anything, always contact a professional to get advice. I am not responsible for any financial transactions, or strategies on this site that you may use on your own. This blog is just general discussion and is not giving advice for your personal situation. Any monetary losses you may incur reading this blog are not my responsibility, and you are encouraged to speak with a financial professional any time you make a financial decision that is described here.