Make sure you are seeing the “whole picture”!

“When I was a kid, I remember playing a game where I saw just a portion of a larger picture. I then had to try to figure out what the rest of the picture looked like.  Most of the time the picture that I came up with in my mind looked nothing like what the bigger picture was. Only when I saw the whole picture could I see how it all came together. Many of us play a similar game with our “financial picture”. This can be dangerous.” – Dave Bucholtz, CFP® and President of Bucholtz Consulting.

 

The pieces of the puzzle…

In the past, if you were concerned about retirement, and visited a stockbroker, you may have been sold 100 shares of XYZ Company. If you went to see a life insurance agent with the same retirement problem, you probably got sold a life insurance policy. Go visit your banker, and you were probably the owner of a CD (Certificate of Deposit). And maybe a new toaster!

These salespeople only saw a tiny piece of your financial picture. And worse yet, they were only able to “complete the picture” with the products they sold.  This “solution” was not necessarily in your best interest. First, you needed to understand everything about your finances. Second, you had to be sure you saw the right person. Not easy.

Personal finance magazines and self-help books tried to fill this gap.  These magazines were designed to help people make smarter decisions about financial products they bought. But many people do not enjoy spending time learning about personal financial issues and are not skilled at investing. The value of the information is limited since it is written for a broad audience. It isn’t possible to know anything about the unique financial circumstances of each reader.

Additionally, personal finance magazines and financial self-help books are judged by subscriptions and book sales, and not by the quality of the advice given. This can lead to a focus on topics that sell more magazines and books, but not on guidance that helps readers. The information may be oversimplified and presented in an emotional and entertaining way in order to generate subscriptions and book sales.

And while some people may turn to the web and its wealth of information in an attempt to avoid misleading magazines and books, this may not always be a good thing. Websites claiming “10 Things You Must Do to Improve Your Finances” or “5 Ways to Make More Money Today!” may look convincing, but provide inaccurate advice. And today, there is so much information “out there” that retirees and pre-retirees can feel overwhelmed. “Analysis paralysis” sets in where no decisions are made and no action is taken. This can be just as dangerous as mediocre advice.

Putting the pieces together…

Most people know they need help in looking at their whole financial picture. From investments to taxes to insurance to estate planning, there is a lot to stay on top of. There is a group of professionals that are specifically trained to look at your entire financial picture and help you to put a plan in place. This group of professionals has earned the Certified Financial Planner certification.

One way to understand the role of the Certified Financial Planner Professional is to consider how we manage our physical health. Let’s explain. Hopefully you have a good General Practitioner or Primary Physician. Your Primary Physician has the best overall picture of your health, keeps your medical records, and can help with most health issues you might run into. If a problem comes up that is outside of their expertise they will refer you to a specialist or surgeon. This system has been developed for two reasons:

  • First, when a doctor practices medicine in an area they are not qualified, the results are disastrous. You do not want someone “learning” on you.
  • Second, it’s probably not a good idea to have a surgeon as your primary doctor, since you may end up having lots of surgery!

For your Primary Physician, you want a generalist with practical knowledge who knows you, cares about you, and communicates well.

And now, the whole picture!

Most people would prefer to work with an advisor that will help them with their overall financial picture, but will bring in experts to manage money, draft legal documents, and keep up to date with current tax law. Certified Financial PlannerProfessionals are specially trained in this regard. For more information about the Certified Financial Planner certification you can visit www.cfp.com.

If you are ready to take the first step to improving your financial future, click here for the First Meeting Organizer. Once you submit a completed First Meeting Organizer, we will contact you to schedule an appointment for your complimentary first meeting. We look forward to meeting you.