When you’re good with money, you get asked a lot of questions. People begin to trust you and they rely on your knowledge.
Then, after a few of your suggestions prove true, they start asking you everything under the sun about investing. You’ve become their ‘go to guy’.
They start to think you’re some kind of financial savant.
And you’re not, not even close (but you wish you were). You’ve just done a little bit of research and are farther along in the game than they are. You know which side is which and how to keep score.
Eventually, as always, the inevitable question will come:
“You know what Q-FI, you’re really good at this stuff. Why don’t you become a financial planner?”
And my answer is simple:
“Because I don’t like hand holding.”
People don’t understand money as well as they think they do.
Now don’t get me wrong, I like helping people and bend over backwards to do so. But when advice is offered and people blame you for the result, that’s where I draw the line.
Here’s the scenario:
I’m a CFP. The markets have tanked 40%. The sky is falling. Clients are calling me nonstop and freaking out.
“What the fuck Q-FI??? The news says the next depression is coming and I’ve lost 20% of my portfolio! You’re not doing your job!”
I reply calmly, like a Buddhist monk on Valium:
“The markets are down 40% and your net worth is down only 20%. This is a good thing. I’ve saved you 20%. Would you take 20% returns as a good year?”
Do you think this scenario is far-fetched? Maybe. Maybe not. But it serves a point.
Most people can’t handle losing money, even if they say they can. They’re emotional and when things go wrong, they want someone to blame.
Until you have witnessed your net worth drop by 40%+, you don’t really know your risk tolerance. You can think you do all you want, but I’m here to tell you:
NO, you don’t.
Maybe you’re a financial ninja. Or maybe you have ice water pulsing through your veins. I don’t know. But what I do know is that you are human. And humans are emotional creatures that tend to assume they know more about things than they really do.
So if you’re too young to have witnessed the great recession, chill out on the market cool aid. Because what goes up, must come down to reality at some point.
It’s easy to be an investor in the good times. If I’m a CFP my clients love me. Everyone is making money and everyone is happy. We can all sail off into the sunset sipping margaritas and smashing pundit pinatas to smithereens.
But it’s the downturns that separate the men from the boys.
Because the market is unpredictable. I can do everything right based on the data, and still lose. I’ve seen this happen too many times to count.
In theory, markets should be efficient, but in reality, they’re not. Markets are emotional, they turn on a dime with the smallest hint of good or bad news.
And in today’s day and age, news is sensationalized.
People want you to make their financial decisions for them.
You need to remember to treat advice for what it is. It is a suggestion. Nothing more and nothing less.
The action and responsibility are on you bucko! YOU! No free passes here.
Do your homework and be skeptical of everything. Even me. Treat me as the shyster I might be and get a second opinion.
Because there’s always someone out there looking for people who don’t want to make decisions. And they’ll have no problem taking that free lunch from Mr. Little Investor. They’ll scoop you right up and have all your problems answered with a whopping percentage of assets managed hidden fee slapped right on your behind before you even know what time it is.
It’s not fair but it’s reality. So be on the lookout. The more you practice the more you’ll start to see and be able to wade through the bullshit.
The financial planning industry needs to change.
I don’t trust (most) financial planners. I believe I have been clear about this in my financial mistake’s posts. And that’s because I’m biased, I know that. I have been burned by one in the past and rarely meet good ones.
And if you happen to be one of those good CFPs, don’t be offended by this. Keep doing what you’re doing. The world needs change agents. People need help with their finances. I’m glad you’re out there. You are a better person than me.
But how do you know which ones are the good ones?
That’s the irony, you won’t. It takes one to know one. Until you start to understand the game, then you’re still a target with a fat bullseye the size of California tattooed on your furrowed, discerning brow.
Don’t let fear be your guide. Don’t let a smooth-talking salesperson sell you on something you don’t need. Understand your situation. Educate yourself and take the lead in your own financial life.
So why didn’t I become a CFP?
Because I don’t believe in the system. Our financial planning options need to change.
And we can be the catalyst…
-Q-FI
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