How Did I Make it to Become a Financial Planner?

Lots of people consider becoming financial advisors, planners, insurance agents, etc. and many try. Also, many fail. I’ve made it, beating the odds, but why?

First, I think I had the right idea about WHY I was doing it.

  1. I wanted to do something that was valuable, and I could see the value every day.
  2. I had related experience in the markets, insurance and sales, so it seemed like a fit.
  3. I had learned that I couldn’t work for someone else.
  4. I wanted something sustainable. This career offers recurring income, and I didn’t see the demand for it ending anytime soon.

When I started, I had one ultimate goal: to build a career that would provide an above average and stable lifestyle that would pay for my kids to go to college. That was it!

Second, I had a few lucky breaks in the first few years. I got just the right clients, at just the right times to pay the bills, make my minimums and live to fight another day.

Third, I had just enough of a network to get in at the right firm. I never paid much attention to building a network before, but organically, I guess by being a decent enough guy, I had built a small but quality one. One of my connections got me into the firm I started with. If I hadn’t started there, I’m not sure I would have made it at all.

Fourth, I did work hard. Now I’m not the type to brag about this. I’m sure there are plenty of people who worked harder than I did, but I know I worked as hard as I could. Till I was cross-eyed. Daily. Especially those first few years.

Fifth, I was brave. I’d be willing to go to networking events alone, cold call people, chat up friends, family, my doctor etc. I was not willing to fail because I was too chicken to prospect. These efforts rarely worked out, but they did just enough, and gave me confidence that I DESERVED to make it, because I was doing everything I could.

Sixth, I invested money. Early on, I allocated 10% of my income (when I was still eating Ramen and Pork n Beans for dinner) to support staff and marketing costs.

Finally, I just believed. I asked “Why not me?” regularly. I had plenty of ups and downs, and almost quit numerous times, wishing there was an easier way, but I’ve stuck it out, and I’m glad I did.

I believe I provide a lot of value. I’m honest and fair to clients, and I legitimately care about them and their financial needs. Money is a critical part of anyone’s life, and it’s a pleasure to be given the responsibility to be the one who helps them win.



Active Management Vindicated?

For years, investors have been sold, and have been buying BIG time, the notion that active investment managers DO NOT beat the indexes. The average fund manager doesn’t beat the index, and they charge fees to do so, so they cost you money to get lower net returns!

This all made sense, as EVERY index just went up and up and up since the recovery from the Great Recession.

I said all along that this flock to passive investment was a bubble in itself, exhibiting typical bubble behavior. It was a bubble not to an asset type, but to a strategy that SEEMED to be different, and better. Active managers and hedge funds have been tested, questioned, doubted and punished in the form of net outflows for years.

Now let’s be clear: MANY mutual funds and hedge funds deserved to be squeezed out of existence. Low quality or expensive funds could not stand up to the pressure, and folded or shrunk, or changed their ways.

But as expected, the flock to passive has been overplayed. CNBC reported $21B in ETF outflows during last week’s selloff. As prolonged volatility persists, and the market staggers, confidence will fade, stocks that have been along for the market ride will struggle, and active managers will show their value again.

In fact, it may already be happening, as early indicators are that active managers delivered on the promise they have made all these years: When things change, we’ll shine, so stick with us.

Does this mean they have won the argument? Not yet, but it is an early piece of evidence that the move to passive was indeed overplayed, and that active will get respect once again.


Happy Europeans

Being of Northern European heritage (primarily), and more importantly, having good relationships with my cousins in Norway, and my wife’s in Denmark, I’ve had a lot of first hand opportunity to observe how relaxed, sane and happy these people are. They’ve traveled here to visit us, and we’ve been overseas to be with them, and I think I’ve come to some conclusions about them.

Now this probably doesn’t surprise you. You’ve seen the happiness surveys, consistently revealing how European, particularly Northern European, and more specifically Nordic people are the happiest.

The usual reasons why are explained, as they are here by CNN, but I’m a financial planner, concerned with not only financial success for my American clients, but also the psychological and emotional enjoyment of life. In short, I want my clients to be relaxed, confident and calm. What good is a successful financial life if you’re stressed out all the time?

So here’s my observation (from a Financial Planner’s point of view) of why my Nordic cousins are so happy.

  1. Guaranteed retirement
  2. Guaranteed health care
  3. Guaranteed income in the case of disability
  4. Guaranteed income if unemployed

See the one word in common for each of those reasons? Guaranteed. Because of the guarantees they have, they don’t worry about unemployment, getting sick, being broke in retirement or becoming too sick or hurt to work. Guaranteed, guaranteed, guaranteed.


Now I don’t think the guarantees themselves account for everything. Surely what they choose to DO with those guarantees has something to do with it, right? So what do they do (according to my unscientific observations)? Travel, spend time with family, learn about and enjoy good food and wine, and learn about the world and it’s cultures. Sounds pretty enjoyable.

It’s makes me wonder: How would life change if YOU had more guarantees? How can you replicate, at least to some degree the sense of security the Nordics have, such that YOU would enjoy life more like they do, and be happier?

Which leads me to some of the most un-sexy, least appreciated and most maligned group of financial products on the market.

Whole Life Insurance: Derided as “expensive” (nonsense) and “commission heavy” (also nonsense), they in fact offer guaranteed premium rate, guaranteed death benefit, guaranteed cash values and guaranteed growth thereon. Obviously serves as protection in the event of death, but also can provide ready cash, education funds, or a supplemental retirement income.

As I write, the markets are melting down and assets are seeing large price decreases worldwide. I’m sure glad I own some of this stuff, which is contractually guaranteed never to lose value.

Income Annuities: A guaranteed paycheck every month for as long as you like. An opportunity to add onto Social Security payments, or to replicate that friend’s pension you’re so jealous of. All my clients who are preparing for retirement are shown what income annuities do. They’re fairly simple. They look at your gender and age and determine how long an “average” person like you will live. Then they ascribe some interest to the numbers, and pay you for as LONG as you like, and even beyond your death (if you want to get funky). Yes, yes, I know “what if I die early and don’t get all my money back?”. There’s a provision to return all the unused money if you want. Guaranteed :-).

*Caution: do NOT confuse income annuities with “Variable Annuities” or “Indexed Annuities” with income riders and bells and whistles. These are the complex, difficult to understand, and expensive annuities you have heard of. They should be dealt with carefully. But they are NOT what I’m talking about there.

Disability Insurance: First of all, know what you’ll get if you get disabled. If you think Social Security will pay you, read the fine print. You have to be totally f—-d up to get any of that. Also, your company plan may suck. I recently reviewed plans for a lawyer at a big-time law firm in NYC, and a Co-President of a major TV production company in LA, and their plans are horrendous. In both cases they have the “McDonald’s drive thru” definition of disability after on year. Meaning if you are capable of sitting in your wheelchair and taking orders at Mickey D’s, they won’t pay you anymore. Anyway, make sure you have coverage, and GOOD coverage. Get a personal, private insurance plan if necessary. They have the best provisions. Once you know you’re covered in this regard, you’ll be more relaxed.

Yes, this and Whole Life cost money. So put your big boy/girl pants on and take care of it. You’ll learn to live without the money you’re contributing to enhance your happiness.

Let’s do it!



The Spark

I grew up in a humble and unstable financial situation. We didn’t have money. Dad was in sales. Mom worked in bars and restaurants. There were ups and downs.

I also didn’t know many business owners. My godfather owned a two-person plumbing business, and I knew a shady guy who owned a summer camp. But most of the people I knew worked for someone else, and the highest aspirations I heard most people talk about were to become cops or firemen.

So when I dropped out of college and needed a job, and got hired as a Domino’s pizza delivery guy, I met the first business owner who made an impression on me.

Matt was an ex-marine who used his savings to acquire this Domino’s franchise. He wasn’t even from the area, but moved here to try to make it as a business owner. His goal was to make this store successful and acquire more.

Matt was energetic, focused and positive, and here’s a few things I learned from him.

  1. Take care of your shit: Matt was insistent that the shop was always clean and organized. While we were working, we kept the place clean and organized. And every day when we closed up, we left the place spotless. Matt showed me how to really mop, not sweeping the mop back and forth lightly, which only moved the dirt around, but really leaning into it, digging the mop into the tiles to get the real dirt up. I learned to like mopping, treating it as a workout at the end of my shift. Doing a thorough and complete job is satisfying in and of itself, but I realize now it’s part of good business as well.
  2. Have a good attitude: Matt modeled a positive, successful attitude, and hired people who were pleasant, focused and professional.
  3. Hire, and trust good staff: Matt hired Majid to run the store when Matt wasn’t there. Majid was organized, professional and pleasant. To this day, he’s one of the best people I’ve ever worked with. I hope he got his own stores, which was his goal.
  4. Say yes and hustle: Offered more shifts from Matt, I said yes, and got positive feedback.
  5. Dress tight: Matt modeled and I copied dressing in a clean, well-fitting Domino’s uniform. I took pride in how I looked, and I think it mattered.

When I look back, I can see how my experience with Matt helped move me toward a future on my own, as a business owner. My direct experience with someone I respected, at a critical time in my life, helped me not only learn a few key lessons, but see a future for myself that would be satisfying, challenging and fulfilling.





So I gave In

After months of struggling with squinting, adjusted, rubbing the eyes, I finally gave in and accepted the truth. I need reading glasses.

I wasn’t intentionally resisting. In fact, I knew this day would come someday. I was more inclined to think I didn’t get enough sleep, or had too much wine last night, or the light was bad.

But those weren’t the reasons I was struggling to read. It’s simply my body aging. Slowly diminishing.

Anyway, it made me think…all through life the body is diminishing, but the mind and soul are growing, and for most of life will continue to grow, until death. I’ll understand more, appreciate more, be more chill, wise.

Meanwhile, my body will properly slow down. I may have less drive, less spark, less aggravation, and that’s good. I’ll also be more patient, more thoughtful, more trusting that all is well.

I’ll be able to relax, observe, be, love, consider, notice.

I’m looking forward to it.


The Car Insurance Game

The Game.

You’ve seen the ads. The constant appeals to your pocketbook from one company after another claiming that they will save you money versus the competition.

The truth is they all will. To get your business as a new customer almost every company will give you a cheaper quote then they’re currently charging their veteran customers.

That’s the way the car insurance game works (and throw Home Insurance in there as well, because you’re probably do that with the same company). They advertise like mad. Get you to call for a quote. Beat your current coverage and then three or four years down the road you find yourself looking at your rate wondering “am I getting ripped off?”.

Yes, you are getting ripped off.

The answer is you probably are! You see they know that you’re only motivated enough to shop your coverage every once in a while. They have detailed statistics on how long people keep their coverage and they know on average they will keep you X number of years. By the way, that’s not data I would know and they won’t ever tell you either, but they have it at the home offices of all the major companies. So, they sell you in at a cheaper rate, then slowly raise your rate to make a profit on the back-end. By the time you’ve gotten up the energy to shop again, they’re in the black.

I’m not making a judgment about whether this system is good or bad. This is just for your awareness so you’re empowered to deal with these companies the best way for you. Be prepared and be disciplined about shopping your coverage every few years. If you do that you can consistently jump from carrier to carrier while they’re offering you the good rates. This will save you thousands over the years.

Don’t be a sucka.

But beware of sentimental feelings like “I’ve had good luck with this carrier” or “I had a claim and they paid the claim”. They all do that. In general, they all take pretty good care of you once you are insured with them. Don’t fall prey to laziness or some false sense of loyalty. Those are tools that they use to get profit out of you. Also, if you have your local neighborhood agent who you see consistently at the parent teacher conference or at the country club or whatever, it might be hard to break the news to him, but shop your coverage around anyway. At the end of the day, what’s more important, his feelings, or your financial success? I think you know the answer. If you must, apologize, or buy him a drink, but move on to the new carrier that you’ve chosen.

Side note: some people LIKE the local guy, and LIKE the fact they have a person who knows them well. If you’re ok paying more for that, so be it. That’s a perfectly reasonable decision to make.

Now, it’s your 15 minute call.



In Defense of the Financial Plan

I’ve been in the financial services business for about 15 years. Before I started, I thought that being a financial planner meant providing a client with an overall plan to help them accomplish their goals. What I found out was that most of the industry was just fronting as “planners” or “advisors”, and were actually just sales people.

I pulled back from some opportunities, and steered my way to the firm that did the work the best way I could find. They had a process. A system that was holistic and comprehensive. They could demonstrate real value, greater protectiona dn welath creation through their process. But they RAILED against “fees”.

The system was something called LEAP. Doesn’t matter if it was good or bad, but the hatred and vitriol my trainers had for “fee-based” planners was fierce. “They drain the client of wealth, a little at a time, forever!”. “They double dip, charging a fee, and STILL earning a commission on sales of financial products”! I bought in, and believed that I did things “better” than the enemy. LEAPers relied only on commissions and asset management fees to earn a living. It was more noble, we believed.

After a number of years at this firm, I switched to another, ostensibly to teach what I had learned at the first to new advisors at the second. One problem: the founders of this firm were fee-based planners! They had been trained to charge a fee for a plan since they first started in the business. They were taught THEIR way was the best, and the way others did it was bullshit. We had a problem.

We talked, shared and debated, and both realized that we were brainwashed as newbies in the business, and would have to reassess our beliefs and find a common ground of what worked.

Fast forward nearly 10 years later. They learned from me, and I from them. Now I am a believer in the value of charging a fee for a financial plan. Let me tell you why.

Positioning: It might hellp to describe the clients I usually work with. They are high income executives, doctors, lawyers and business owners. They have bought financial products before, and have interacted with advisors, insurance agents, lawyers, etc. for years. What are they missing? An objective, overall assessment and guidance on their trajectory towards the goals they have. They don’t have the time or interest to become experts in every area, and are either not inclined to try, or admit (this is most common), that they could never really become expert anyway. They need a partner, a personal Chief Financial Officer who has a system and process to pull it all together. That’s what I offer.

Now, how do you pay for such a service? With a fee. Just like you pay a general contractor, accountant, architect or attorney. A contract; a deliverable; a fee. Period.

They are paying for the time, expertise, tools and ultimately road-map I create to put them on track and identify exactly what they need to do.

Comfort: People aren’t stupid. When an advisor offers to meet with them 1, 2 or more times, and the specifics of their compensation have not been revealed, prospects get uneasy. I would argue the advisor does too, wondering if he’s wasting his time, or if it will be worth it, or if this is the one that will get her to the sales goal she’s been pushing for. That concern on the part of the advisor and the prospect gets in the way, stunting communication, connection and openness; all essential ingredients to a good immediate result, and more importantly, to serve as the grounding for a good long-term relationship.

Quality and time: When I’ve been paid for a plan, I’m not worried about the amount of time, number of meetings, phone calls, texts or emails I must deal with. I can take my time with my planning team and the client, to refine, review and improve the plans I create. I know that worst case, I won’t lose money on the exchange.

Differentiation: As a practitioner in the financial industry, competing with  thousands of others, websites, free services, apps, etc. you might think it’s counter-intuitive to go the other way. When everyone seems to be fighting to do it cheaper, easier, faster, you are deliberately putting a potential roadblock in the way: the need to create a professional relationship, before a product or advice is given, for a fee. In actual practice, though, it becomes a key ingredient to why a client hires me. I’m offering something different, and I engage with them in a different way. They get it.

About the “double dipping” critique: So my clients usually pay me a fee for a written plan, and they usually do at least some of their financial and insurance products with me. So yes, I may get paid for both. But I also advise them on asset allocation on their 401k (for which I can not get compensated), help them find ways to save more every year, and  design their wills and any trusts for them (the savings on the lawyer fee alone makes up for the one they paid me), among other things. I don’t think there’s any doubt they get far more than what they pay for.

In the world of financial planning today, you have a decision to make. Will you stay the same, competing with technology, apps and Vanguard to offer things cheaper, faster, simpler; or will you step aside, train yourself to offer a value that puts price out of the question? I recently had a doctor prospect say to me “let me know if I have this right. I get this plan, and YOU for as long as it takes to get the plan set up and implemented, for (in this case) $3150? That sounds like a no-brainer. Am I missing something?” I said “no”, and we got to work. He also popped a bottle of wine for us to celebrate 🙂

That’s what I call a client relationship that you want to have, and the fee-based approach is key to it.

What do you think? Let me know.