Viewing entries tagged

Generation "Why?"

Hangovers are tough.

All too often we forget that different people, raised at different times and in different ways see things entirely differently than others might.  I wonder what Generation "Y" thinks about our recent financial history and how their understanding of the facts that brought about the worst financial crisis of our time will impact their actions as they move forward in life?

What would your view of the banking sector be if you were at the precipice of your financial life in 2007-2009?  I wonder how much faith and comfort you'd have as you viewed your future financial landscape and considered the role that the banking and brokerage industry would play in your goal planning? My bet is that you'd be skeptical at best and skepticism typically leads to avoidance. 

Skepticism in finance is almost never a good thing. There's already enough "built in" propensities to avoid matters of personal finance, adding to the pile of impediments is not a good thing. 

And how do we propose to alleviate the problem before it snowballs into other ones? I'm not sure that we've thought that one threw have we?

What if an entire generation has lost it's faith in "investing" and "banking" seeing them both as self absorbed sectors, bent on greed, unfairness and lack of transparency?

What will that portend for the housing market?

What will that portend for retirement for a generation afraid to trust anyone with just about anything having to do with their life's savings?

What will that portend for social programs, already straining to provide for people?

Many outcomes are unintended. The lack of intention however has no direct corollary to the disruption it causes.

What we better start getting right in our thinking is this: Our actions send a wave of information forward and that wave, like the ripples on a pond reach all points. Understanding that the impact of and implications of that ripple last long after we've last seen it traverse the surface is something that we seem to keep missing. 

To this day, I meet with both existing and prospective Client's of a certain age who also don't trust "investing" or "ETF's" or "advisors" or much of anything else, absent dirt, a purposely built home and cash. 

Their starting point; the Great Depression. 

Bottom line is that "it" lasts longer than we think, takes more of a toll than we realize and consumes the thoughts of a generation. 

The failure of the Financial Crisis and the havoc it caused might need to be measured for the rest of most of our lives. 






Well, it's been over a month now since the plethora of New Years Resolutions were made, and I was wondering how you're doing on accomplishing those "goals" you set for yourself?

Setting goals, whether it's to start a new habit or finally get something done that's been on your to-do list for way too long, plays out many times in an all too typical fashion. 

At the outset, our energy for getting things done is at it's zenith. We can envision all the good that will come from our efforts, and early on, it all seems well worth the sacrifice that we'll have to make. 

But all to often what plays out in real life, is that we make "some" progress towards the goal and then there's an energy shift.  What use to be the energy to accomplish our goal and nothing less, becomes a division of energy.  Part of that energy gets consumed in rationalizing in our mind why being only part way to the goal is good enough. After all, we've lost half of the weight we'd originally planned but we feel better and our clothes fit a bit nicer so that's a plus. The remainder of our energy gets used doing everything within our power not to slip back to where we were before we ever started.  Odd, that our desire to actually meet our goal is all but lost, but only because we never purposely direct our energy back to "accomplishment" not progress. 

In personal finance, I refer to this often as the "knowing v. doing" gap. I can't tell you the number of people that I've worked with who now had teenage children and yet, they hadn't ever gotten their estate documents in order.  Their Wills don't even reference the kids, because the document that they have was drafted before they were borne. In conversation, these folks can recite, title and verse, why they need to update the document, who would have done it were it ever to have been finished, the importance of having it done, the reasons behind having it done, etc. 

You can tell that the tone of confidence in their voice about the issue comes from a place of "doing" not of knowing. For them, knowing that it should be done, knowing how it should be done, knowing that it can be done is the same thing as having actually done it.

Except that it actually isn't.

No matter where you're stuck, getting back on track isn't all that hard. You just need to redirect your energy and focus it back on attaining your goal, not merely moving towards it.  Accept nothing less than "getting it done." Expect nothing less of yourself than you will do it. 

Life in the abyss of compromise and rationalization is a dead-end. 

Now get back out there and start getting it done. 

Sign Up for Our Mailing List

The River Guide

In Seth Godin's blog post (you can read it here) from May 16th, he talks about the river guide and the rapids in short but eloquent terms.  


Frequently, we're asked to change things up, adapt to the market, react to the news, fine-tune strategies for current events. Nothing could be further from rationale.  

Advisors, when they captain the "boat" correctly tend to not over-react. Over-reaction and emotional actions are the purview of the uninformed short-cut taker.  

And let it be known that there are Clients who over-react and live on emotion and advisors who do so as well, ardent in the belief that the way you add value is to "change it up" and show that you can meet the challenge.  Doing nothing unfortunately is not recognized as strategy in many quarters and that's unfortunate. 

But imagine the heart surgeon who thinks that the likelihood is that you might be in for a cardiac surprise at some point if you don't loose weight and watch your cholesterol telling you that it might be better to operate now just on the off chance something bad might happen someday down the road.  Nope, then you'd feel that doing something was specifically not the thing to do and we'd agree. When the action doesn't cure the problem or when the problem does not yet exist, then staying the course is the right choice. 

Let's celebrate doing nothing by judging it based on it's effectiveness and not it's level of effort.  


The All Too Tentative First Step

We know what it is that needs to be done. And, we know what needs to be done far more often than we give ourselves credit for. 

We stumble over roll-outs,  and we leave meetings having not said what we knew needed to be said.  Cautiously, we avoid topics, skate across conversations and drive-by decisions that should have been made. Our projects linger, our deadlines come and go and the opportunities we once had, we may have no more. 

What are we waiting for?  We're waiting for the rescue. We frequently wait for reinforcements, or “the right time” or someone else to open the door to the next step. 

My sense is that if we own the issue we own the answer. 

Read more about taking the first step no matter what options “waiting” might offer. 

Great Advice Isn't Like Pornography

It's often said of pornography that "you know it when you see it." Not the same can be said for great advice. 

Great advice is about you first and everything else second. 

Great advice is about you first and everything else second. 

What constitutes great advice by the way? That's a good question because for all the advice that's out there, it's my opinion that not much of it would be classified as great.

What constitutes great advice by the way? That's a good question because for all the advice that's out there, it's my opinion that not much of it would be classified as great. 

In a recent post, Dan Rockwell of Leadership Freak, shared with us 7 Ways to Identify Great Advice. Since I've linked his blog on the topic, I'm obviously not going to share all seven ways with you here. But, I would like to comment on two of them that particularly resonate with me because I see them almost every day at BCM. 

First, in order for advice to be great, it has to have your best interest at it's core. All to frequently, especially in the realm of personal finance, the advice that you get has someone elses agenda at it's core, not yours. Advice that has someone else's agenda as it's driver can be both destructive and dangerous. 

Second is something that I remind clients and prospects of constantly, namely, "I can't change you!" To be sure, I can give you some motivations to change behaviors or perspectives and through that lense, I can hope that some behavioral tradeoffs get made. But, fundamentally, I can't change clients directly in any way. The reality is that my client's change themselves, I don't change them at all. 

Advice that results in positive behavioral change is among the most benefical and powerful kind of advice of all. 

I hope that you'll check out Dan's blog here so that you can be better skilled at recognizing "great advice" when and if you see it. 

It's the kind of advice we give every day to the clients of BCM. 

Disagreement With An Icon

I hate disagreeing with people, but in finance, that's more or less the norm at times.

I hate disagreeing with people, but in finance, that's more or less the norm at times. 

Avoiding losses also means avoiding gains. 

Avoiding losses also means avoiding gains. 

Zvi Bodie, who is the Adele Barron Professor of Management at Boston University is one of my favorite authors and speakers. His textbook, "Investments" is renowned around the world and is used in the certification program of the CFA Institute and the Society of Actuaries. 

With all that said, sometimes, even Zvi just gets it dead wrong.   

In a recent BU video titled "Three Crucial Tips" Professor Bodie offers some "salient" advice on matters of personal finance. I take exception to just about all of them, here's the skinny on each

1. Take No Risk

Professor Bodie notes that he hates to lose money more than anything and to that end, he takes virtually no risk with his investments. He further notes that [a] he is much more concerned about loss than he is about gains and [b] taking risk is dependent on how you're going to feel if you lose the money. 

Well, first off, Professor Bodie is a professor of management so we can assume safely I think, that he's probably paid more than most people and being grounded in management, he's  a bit more comfortable confronting his financial issues than most are. To that end, he likely started saving early and often with reasonable deposits. If most people were to operate that way, saving early and often, the need for "risky" investments would naturally diminish over time. After all, once you've accumulated enough to fund your goal, it's funded. Enough said. 

As to concern about losses, behavioral science tells us that there is no difference between professors and the general population, everyone counts losses more than gains. That's why people prefer to buy into the stock market at 12,000 on the Dow (when it's expensive) instead of at 8,300 when it's cheap. Amazingly, we're so scared of losses that we inadvertently wait till they're the most likely to happen in our effort to avoid them. That's part of the problem. If that seems irrationale to you, let's shift the "consumable" from stocks to socks. If you needed to buy a supply of gym socks for your year long workout regime, better to buy them at $3.00 a pair or $1.00 a pair? I thought so. 

2. Trust No One

Professor Bodie contends that "no one knows you better than you know yourself." Again, enough said on that, and simply stating the obvious doesn't, in my way of thinking, present a cogent argument on why to either do or not do something. 

At point of fact, we don't even really know ourselves all that well. If we did, we'd have a better understanding about our goals, vision and dreams for the future and we'd be doing something to make them a reality. 

While it's true that no one knows you better than you know yourself, you can in fact, work with an advisor who will know you almost as well as you know yourself and, who should be able to motivate you to do something to make some progress towards your hopes and dreams. 

The Professor did note that if he had to take his car to be fixed, something he'd trust someone else to do, he'd ask a lot of questions of that person. That's good advice, when people seek out a financial professional to help them, they too, should ask a lot of questions. To the best of my recollection, both the FPA and CFP Board have consumer materials on their website listing questions to ask your advisor. 

3. Get Guarantees and Read Some Books

Oh boy. Really? We're sort of back at square one. There aren't many investments out there that come with guarantees. There aren't any investments out there that come with guarantees that are in and of themselves going to enable you to reach your goals. Remember when Jimmy Carter was president? The yield on 30 year treasury bonds was 14%, unfortunately, the core inflation rate was about 16% which meant you were locking in a guaranteed loss of 2% in purchasing power. Is this the type of guarantee that Professor Bodie had in mind? I think not. 

The good professor also notes that finance isn't that hard and that there are many books out there that can teach you about finance if you'd read them. 

There are as many books out there about weight loss and yet we live in a world of largely large people. Cooking, wine, golf, scores of books producing woefully bad results. If reading about something meant that you'd automatically inculcate what you read into your life and times, what a wonderful world this would be. 

And, yes, personal finance is easy if for no other reason than what ideal life you aspire to has nothing to do with financial matters, since;  [a] your goals financial and otherwise should be based on your wishes, dreams and building a life that makes you happy, [b] you can delegate the complicated part to someone who will make that ideal life the centerpiece of everything you do and each decision you make, and lastly; [c] all you have to do is start and then keep up with it, in concert with a trusted advisor to guide you and help you make interim course adjustments. 

Finance should work like the Apollo mission. JFK said we were going to send a man to the moon and bring him home safely before the decade was out. (Note: This is a GOAL, clearly defined and stated.)

He had the vision about what he wanted and then he turned it over to the people that he trusted to make it happen. 

Then it happened. Enough said. 

Were there not the details of life, were we all blessed with all the understanding and money we needed, personal finance might be easy. 

Steve Jobs was rumored to have told his designers and technicians at Apple to build the best phone the world had ever seen. 

Then he too turned it over to people he trusted to make it happen. 

Here's the the real three topics you must learn; 

  1. Say what you want (set appropriate goals)
  2. Turn it over to someone who will help you make it happen 
  3. Trust the process  

When will you?   

Take a tour red.jpg