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  • Writer's pictureRobert Dunn, CFP®

Wrong Question, Right Financial Mindset: The Question We Really Want You to Consider

Updated: Aug 1, 2023

timeline for life planning

Key Takeaways

  • Consider how you would complete the following statement: “I will be wealthy when……..”

  • The business models used by large financial institutions are not designed to partner with you to design a truly personalized path.

  • To provide our clients with confidence, we focus intently on five key areas: goal development, retirement plan, cash flow plan, investment plan, and tax mitigation.

When people who don’t know me well find out what I do for a living, they inevitably ask me what I think the stock market will do or which company they should buy. I guess some people think I have a crystal ball in my office that allows me to predict the future whenever I like. Maybe I shouldn’t be so surprised when you look at what’s being peddled to the masses every day in the news, media, and retirement planning “seminars.”

Before answering questions about the stock market or specific names to buy, I need to know if you have your personal planning in order. Do you and/or your significant other know your relationship with money? Have you established specific goals? Do you understand your cash flow needs? Do you know your investments will fulfill those needs along with any threats associated with those needs? Unfortunately, too many gurus out there claim to have all the answers. Investors are too willing to take speculative guidance from “experts” who don’t know their personal situation and whose recommendations may or may not align with their needs.

Here’s what people should be asking me instead: “Bob, can you help me create real wealth?” I may respond with the following: “Please finish this statement: I will be wealthy when……“

This statement forces them to contemplate what’s truly important to them and then we can start to talk about their short-term or long-term cash flow needs. What dollar amounts are associated with those needs? Do they have insurance in place? How far out are these items needed? Are they needed immediately or 10 years down the road?

It's all about thinking about the right things and not anchoring yourself to the headlines and all the unknowns facing investors and retirees today. That’s what the stock market always reacts to—a lack of information.

To provide our clients with peace of mind and confidence, we spend a lot of time putting together customized plans focused on four key areas:

man sitting on throne made of cash

1. Retirement plan. Let’s go back to my question: “I will be wealthy when…….”. First, we need to know your goals and what’s most important to you. What’s the time horizon for reaching your goals and what are the dollar amounts associated with those goals? What kinds of resources do you have to fulfill those goals and what will the drawdowns look like from those resources? By answering those questions, we can start to lay out your retirement plan.

2. Cash flow plan. Here we focus on financing all of your internal expenses. Suppose the retirement plan is not for 10 years, but between now and then you must fund your children’s education. Where is that money going to come from? Is there enough in your 529 plan, or do you need to tap stock options or just some of your regular take-home pay to fill the gap?

3. Taxes. This all ties into taxes, because you may need to pull from different sources of money in a tax-advantaged way. Is your income (hence your tax situation) likely to change in the near future? Are you sitting on a mountain of gains or stock options that haven’t been exercised yet? Everyone’s situation is different. Are you a high-income earner or just getting by? There are so many variables that play into this discussion and they’re highly personalized.

4. Investment plan. What will my portfolio do during the short and long-term investment environment? How will that impact my cash flow and ability to achieve my goals to pay for college, retire, take a vacation or simply pay my monthly bills into the sunset?

Large brokerage houses and other financial institutions can’t spend as much time with each of their clients as we do. Their business model doesn’t support it. They have a certain number of off-the-shelf solutions that they can offer to account holders and they simply try to find the best one to fit the account holder’s situation.

man confused about which path to take

Colleagues who’ve worked at large institutions have told me that advisors there are not allowed to give clients personalized guidance. Instead, they must take what they know about each account holder, feed the information into a software program, and follow what it spits out based on “probability of success.” For people who are still early in their wealth-building years or who don’t have a lot of complexity in their lives, that automated approach may be fine. But, when you’re faced with a fork in the road, who will keep you on the right path?

We’re facing more and more unknowns every day from inflation and interest rates to the debt ceiling and regional banking crises. If you’re super disciplined, you may stick with your plan. However, we typically see that many people that come to us have been sitting on cash because they are frozen by the conflicting headlines and guidance. Or they sold in the past after a bad investment experience guided by speculation.

Having custom and personalized guidance changes the strategy significantly. Don’t wait until you’ve been humbled by a bad financial decision, or are on the cusp of retirement, to seek the guidance of a full-service, comprehensive wealth advisor. You might also find a highly trained CFP® at a boutique planning company useful for helping resolve conflicts between you and your spouse when it comes to money decisions. It’s more common than you think for husbands and wives to have very different relationships with money, which often stems from the money messages they received growing up. Independant fee-only financial planners get to know their clients’ history extremely well, how they go about making decisions, and what their trigger points are.

Make sure you are receiving the peace of mind you deserve.

Real-world example Several Novi clients have come to us from large financial institutions where they were not receiving personal comprehensive guidance about their finances. While their “representative” could provide generic advice, he or she could not provide them with personalized advice about tax planning, cash flow, distribution planning, Roth conversions, Social Security distribution planning, and pension guidance to name a few. Each of these planning items requires extensive expertise as well as sensitivity to each client’s situation.

keyoard with tailored solutions button

It takes more than plugging in some numbers into a template or model. It’s hard to feel confident in a successful outcome of your financial plan when you are only receiving generic guidance. Before joining us, one of our clients was paying 1.5% per year at a large financial institution and not getting the personalized attention that they would receive from a comprehensive holistic wealth manager -- for a lower fee.

Large financial institutions have no loyalty to you. We have had clients tell us that they started searching for a new advisor because they finally understood what was important to the larger institutions, and it wasn't them. A typical story relates to a promoted representative. Upon the promotion, they would suddenly assign you to a junior representative as soon as they decide to promote the representative you were working with. Nothing personalized about the initial planning or the transition. The advice we provide our clients is personalized and our advisors are ever expending their knowledge. This leads to promotions for demonstrating the ability to provide confidence in helping our clients discover their wealth. But we treat the transition like you would transition a rare plant, with care and nurturing. If we must transition a client, it can take six to eighteen months of meetings and collaboration. In the end, it may not be appropriate for that relationship, so it doesn’t happen. It is possible to accomplish this when the client-to-advisor ratio is lower than 50:1 as opposed to 400:1 at many large financial institutions. Conclusion If you or someone close to you has concerns about your portfolio, retirement plan, or cash flow situation, contact us any time to discuss. We’re happy to help.


ROBERT B. DUNN, CFP® is the President and Managing Partner of Novi Wealth


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