Is It Time to Fire Yourself as Financial Advisor?

Travis McShane, CFP®, CFA

When it comes to managing our own money, it can be difficult to keep our emotions in check. But if we don’t, we might make rash decisions that are detrimental to our financial well-being and lose sight of our long-term plans when things aren’t going our way.

Sometimes it can even be overwhelming just to get started on the process of financial planning on our own. If you want to subject yourself to information overload, try typing “financial advice” into your favorite search engine and have fun parsing through the millions of webpages of varying quality with opinions on how to handle your personal finances.

From there, you’ll need to establish the credibility of the information you are reading, determine whether it applies to your situation, and finally, consider whether it the best available solution for your financial situation. This can be a lot of work, which is why so many people elect not to do it at all.

However, the “ignorance is bliss” model generally doesn’t work well when it comes to important decisions like your life savings and providing for your loved ones. Most people don’t like to be surprised when it comes to money (unless you win the lotto), so it’s important to at least get started on the financial planning process.

Phase 1: The Initial Financial Plan

If you are willing to do the work yourself, there are several topics on which to educate yourself to ensure you make the most out of your resources and fill in gaps in your financial plan. Here are a few of the topic areas to get started:

  • Debt management

  • Cash flow management

  • Insurance planning

  • Estate planning

  • Retirement planning

  • Investment management

  • Tax planning

After you’ve come to initial decisions in each of these areas, you’ll need to fit them together in a comprehensive manner to try to maximize the resources available to you. It is easy to go overboard in one area to the detriment of another area. (For example, it is easy to say, “Save more for retirement,” but if you’re racking up credit card debt, you’ll probably want to take care of that first.)

After you’ve puzzled together your initial plan, it is a good idea to put it down in writing so you have a reference in which to refer back. We provide fee-only financial planning at our Fullerton advisory firm, and one of the first things we do with clients is put together a written financial plan. The plan not only helps us address gaps in our clients’ affairs but also serves as an investment policy statement. That means we have a written strategy in place before making a single investment.

After your initial plan is in place, you’ll need to set up a schedule to make sure you review it regularly. Your life circumstances will continue to change over time, and Wall Street will continue to make daily headlines. You’ll need a disciplined approach to ensure you can make progress toward your goals.

Phase 2: Financial and Investment Discipline

If you’ve made it past the initial plan phase, then congratulations! You made it past the easy part. The hardest part of successful investing is maintaining discipline over long stretches of time.

I struggle with maintaining discipline in several areas, but this past weekend had landscaping fresh on my mind. There seems to be a weekend every spring where I spend all day pulling weeds, mowing, edging, planting, spreading mulch, trimming bushes, and fixing sprinklers. The place looks great for a couple of weeks, and then as time goes on, I’ll start to notice the grass getting longer between trimmings, weeds popping up more frequently, or one of the sprinklers breaking and the lawn starting to yellow.

My problem isn’t the initial weekend. I’m willing to do the work upfront, but my follow-through the rest of the year is lacking. The idea of paying someone $60–$70 a month for something I can do myself has bothered me, but I think this is the year when I finally break down and hire a gardener!

While the consequences of not keeping your grass trimmed are minor (unless you live in one of those Orange County HOA communities that fine you), the consequences of not getting your finances in order can be serious. Take this as a gentle reminder to work on your financial planning, and if you’re not willing to spend the time on it yourself, get some advice from a fee-only planner to help you along the way.

Schedule a 15-minute discovery call with a fee-only financial advisor to discuss your personal situation.

Travis McShane, CFP®, CFA