Wealth Managers No Comments

There’s an old Yogi Berra –ism (though correctly attributed to computer scientist Jan van de Snepscheut) about theory and practice: “In theory, there’s no difference between theory and practice. In practice, there is.” While Yogi may have attributed the concept to baseball and Van de Snepscheut to computer algorithms, it also applies to personal finance.Most financial planners will (or should) admit that recommendations they provide to clients are not exactly rocket science and often are rooted in some basic financial common sense, along with a hefty dollop of analysis, tax rules, asset allocation strategies concerning compounding savings and rates of return versus interest amortization, inflation and spending. In short, success in personal finance and planning is often pretty simple to understand to anyone who takes the trouble to carry out the various tasks required to create a workable plan.It is often the execution (or day-day practice) of good financial habits that get people in trouble, (read: being human, with all our collective foibles). We (over)spend when we should save, drive up the credit card balance, forget to pay the life insurance premium, under-insure our car/home, hide our heads in the sand about college costs for our kids, and dismiss the notion of our own eventual demise and fail to get our estate in order. All those things and more.And we forget the lessons of the past. The tech boom and bust of the late 1990’s. The inflation of the 1970’s. How markets recover eventually from a crash. That something for nothing is, and always will be, a fantasy. That companies need sales, revenue and eventual real earnings to survive and support a wildly-high stock valuation. Or how supposedly-secret stock tips or strategies touted by investment newsletters are not really so secret or exclusive (except to you and three million of your closest co-subscribers). And despite common knowledge about Ponzi schemes and ever-vigilant regulators watching out for unethical product-pushing, advisor-charlatans, consumers still get taken to the cleaners at times. PT Barnum is attributed with the snarky comment about a sucker born every minute. When it comes to personal finance, Barnum was a prophet.In our 24 years as a firm, we’ve seen that many clients do, in fact, have a pretty decent handle of what they’re trying to do and why. Circumstances and life-events may have derailed their initial plans or perhaps things didn’t work out the way they hoped. That’s life, of course. In most cases,our work with these folks have been chiefly to crystalize and structure what they innately know about their money – they often just need someone who, with some specialized knowledge and the software programs to demonstrate in charts and graphs, can help them flesh out the numbers and forecasts into something they can grasp and understand. With this direction and a second opinion, people often feel empowered to forge ahead toward their objectives, despite the many obstacles and setbacks that are part of life. For the most part then, people have a good feel for where they are, whether their future looks bright or potentially troublesome.After these many years, we’ve also seen that even those with modest means can build wealth for the long-term. For these people, their advantage is having stout fiscal discipline, adherence to a plan of some sort, a conservative lifestyle and the faith that the sacrifices they’ve made along the way will serve them well in the future. There are many new financial books published each year, but the basics remain the same. The markets, investing trends, financial gurus and politicians, of course, all come and go, but if you save for the future, invest widely and carefully, avoid falling prey to get-rich schemes or ill-conceived financial decisions, most likely you’ll end up with sufficient financial success to fill some, if not all, of your dreams and aspirations for you and your family. It just takes a plan and the willpower to execute it.