A Good Financial Advisor Will Tell You…
Since our book, titled “A Good Financial Advisor Will Tell You…,” was published a couple years ago, it has become a bit of a sensation and garnered rave reviews on Amazon. It is not a stereotypical introduction to investing book.
We wanted to break the norm, show an insider’s perspective, and clearly and concisely explain what works and what doesn’t when it comes to retirement planning. We dive into topics on every pre-retiree’s mind:
- How do I figure out if I have enough to retire?
- How do I structure investments to produce inflation-adjusted lifetime income?
- How do I set up my affairs for my ultimate beneficiaries?
Readers can benefit from the real life examples we have seen in our work as wealth management professionals at Planning Great Retirements. Our expectation is that after reading the book, you will be a better investor and a more educated consumer of financial services.
The Psychology of Investing
Investing is more than guesswork. It is more than numbers. There is a whole psychology behind how people make their investment decisions. Most people make financial decisions with their hearts and try to justify them with logic. Fear and greed are strong motivators that have a way of hijacking the best laid investment plans. The problem is good investing is typically counter-intuitive which is why the most common investment mistakes are made repeatedly. Most investors fall prey to normal human psychological biases such as: the casino effect, better-than-average bias, cognitive dissonance, recency, and extrapolation bias. These tendencies, which are explained in the book (with examples), lead individuals to buy high and sell low—the opposite of what they are trying to achieve.
Invest Like a Pro
After a thorough discussion about how emotions get in the way of investments, A Good Financial Advisor Will Tell You discusses how the “pros” invest. It starts with an Investment Policy Statement that acts as a roadmap. Specifics about what you will invest in and how you will decide when to buy or sell are outlined. This reduces the influence of the biases described in chapter one.
A good financial advisor will create a diverse portfolio with alternative assets classes to reduce volatility. This chapter will give you specifics on how to build such a portfolio.
You Can Reduce Your Risk without Reducing Your Returns
The objective of most retirees is to achieve their financial goals with as little risk as possible. Conventional wisdom says you need to take more risk to achieve higher returns. This isn’t necessarily the case. Look for our “seven steps to a lower-risk portfolio” in chapter three.
America and Retirement
Retirement is supposed to be a fun time of life when you can do whatever you want (travel, play golf, visit family, etc.). However, you will need a plan that gives you confidence and reduces or eliminates financial stress. This chapter will provide genuine insights regarding what you assume in your plan regarding life expectancy, inflation, and future healthcare costs.
At Planning Great Retirements, we never make judgments about what you should spend your money on. You can spend it how you wish, but just don’t run out. You need to understand the main components of your retirement income and prepare for the decisions you will be making about Social Security, pensions, real estate, annuities, and investments.
It is likely that one day you will leave money to kids, grandkids, and/or charities. Do you know how to ensure that the money gets to the right people and organizations with the minimum taxes and delays…and then gets used in the manner you envisioned? We discuss the following tools:
- A “what if letter”
- How to use incentive language in the beneficiary section of your will or trust
- Spendthrift trust
- When and why to consider life insurance as a wealth transfer tool
- Multi-generational IRAs
- 529 plans
Addressing The Myths
Many commonly accepted financial beliefs are based on mental shortcuts and bad information. A Good Financial Advisor debunks seven myths that may lead you down the wrong investment path.
Working with a Financial Advisor
You may need the help of a good financial advisor to develop a plan and manage your investments. We even provide a list of questions to ask when interviewing a financial advisor and some thoughts on how to evaluate their performance. As we conclude this summary of our book, we would like to offer parting advice to keep in mind as you search for the perfect advisor:
- Don’t hire a “yes man” (or woman).
- Choose an advisor that charges how you want to be charged whether he or she is a commissions, fee-only, or fee-based advisor. (See the explanations in the book.)
- Don’t buy investments, buy solutions.
- Keep a long-term perspective.
Note: The authors of this book and their Registered Investment Advisory firm, Surevest Investment Counsel, utilize a modified endowment model for their clients’ portfolios, which is based on the demonstrated success and methodologies of large institutional investors. Certain investments described in this book may not be available to individual investors. Results for individuals can vary significantly from large institutions. Some strategies/investments are available only to “accredited investors.” Past performance is no guarantee of future results and investors can lose what they invest. Securities offered through Securities America, Inc. member FINRA/SIPC.