Are Your Financial Symptoms Going Undiagnosed?
Submitted by Dorval & Chorne on March 6th, 2018
By Keagan Kinsella | Tuesday, March 6th, 2018
Imagine you went to your doctor because you have a sore throat. But, you also are breaking out in hives all over your face. The doctor diagnoses you with strep, writes a prescription, and sends you on your way. Sure, your throat might feel better, but what about the hives? What if the hives are a sign of something more seriously wrong?
A good doctor would not ignore other problems you have, just because it was easy to treat the strep. Seems like common sense, right? As strange as the connection might seem, I’m here to tell you why financial advisors should act like good doctors and diagnose all of your symptoms before developing a plan of action!
We recently had someone come in who had just met with “their advisor” through a large investment company. His employer suggested he meet with them for advice about what to do with the stock options he was receiving through work. He explained to us how the advisor ended up trying to sell him an annuity, in order to defer taxes “similar to a Roth.” The annuity is more of a retirement solution, but he already had a 401k which is a perfectly good retirement savings vehicle and this couple was already well positioned to meet their retirement goals. However, in this case they had more immediate priorities such as paying down debt and saving for their children’s education where the stock option money could be better used to enhance quality of life now rather than waiting until retirement. The worst part is, the advisor claimed to take into account “his entire situation” but ignored the fact that this 30-year-old had his entire 401k balance invested in a target date retirement 2020 fund…which was invested very conservatively for his time horizon! This should have been an easy diagnosis for the advisor, but he never looked at this critically important part of the plan. We were able to come up with different “treatment” options for them, because we were focused on a full diagnosis rather than looking to sell a product to help address just one “symptom.”
There are many advisors out there who don’t give their clients comprehensive, full wellness check-ups. Instead, they reach for the one-size-fits all quick-fix that may not even be in the best interest of the client. Basically, they hear the client has strep and fix it…no matter how obvious the hives might be! As great as a quick-fix might sound, there is not one magical drug that can fix everything—the strep prescription is not going to clear up your hives. Likewise, simply having an annuity doesn’t automatically make you properly situated for retirement! It is much easier to prescribe drugs to treat a symptom rather than put together a comprehensive health and wellness approach for a patient that might better address all of their symptoms. In the case of the couple we helped, the annuity was the “quick-fix,” when what they really needed was someone to help them evaluate how to better align their financial resources with their personal goals which included properly allocating his 401k.
While we wish these “misdiagnoses” were rare incidents, it happens more than you might think. Many investment companies have grown to be so large that they have “advisors” specialized in selling certain products or services. It is not unusual for someone to be compensating an advisor they have never even met, or don’t even know their name! It is at this point the distinction between simply having an advisor, versus having a relationship with a financial planner becomes quite clear.
The terms financial planner and advisor are thrown around interchangeably...but what is the difference? At Dorval & Chorne, we believe in Quality of Life Financial Planning. We don’t simply want to be the advisor whose name shows up on your statement, we want to be the people who know your goals, and help you align your financial resources in the best way possible to help you achieve them. We always act as fiduciaries, which means we have the best interest of the people we help in mind. We do not have alternative intentions that involve only looking out for “that one symptom.” Instead, we think your advisor should gather all the pieces of your puzzle, and understand your goals before offering advice. You want someone who considers your pension income, who helps you think about when to claim Social Security, or who will help you navigate your employer sponsored retirement plan. This is truly financial planning focused on enhancing qualify of life.
We think it is fantastic when people have an advisor, but we encourage them to make sure they are receiving financial planning. It is concerning for us to see advisors not take precautions about important “symptoms,” which play a significant role in your financial well-being. We believe everyone has a unique situation. Similar to how there is no magic pill that treats both strep and hives, there is not a one-size-fits-all solution which can properly manage all of your money. Your goals and dreams should dictate the advice you are given, because these are the kinds of things that truly impact your quality of life!
