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How to get Goldilocks financial advice

by | Sep 11, 2014 | SELF-PUBLISHED

Not too much, not too little, but just right

When it comes to financial advice, many people suffer from Gordon Ramsay syndrome.

That’s my term for those who have far too many financial cooks in the kitchen, and who end up listening to the one who shouts the loudest. That’s no way to plan your finances, manage your money, or build a winning investment portfolio.

Too much advice…

You may have seen one of those reality cooking shows where teams of multiple chefs compete for some lame prize or other, complete with much shouting and clattering of pans. TV chef Gordon Ramsay has made a career of this sort of thing, entering the fray cursing and shouting until everyone does what he says. For some, that’s entertainment. But if that reminds you of how your personal finances are run, it could be disastrous.

You might, for example, have one or even two or three insurance agents. Perhaps you’ve purchased a mutual fund through your bank or a fund dealer. You might have bought some shares through a full-service stock broker, and you may also have an online discount brokerage account that you set up for an RRSP or TFSA but that you never quite got around to managing. And all of these people and organizations regularly call you or send you mail or email with scads of information that you promptly pitch in the blue box. For all the advice your seem to be getting, your actually none the wiser.

The biggest thing wrong with multiple advisors is that no one person sees the big picture. In one way or another, all the pieces of your personal financial world are inextricably linked. Pulling a string here could have severe unintended financial consequences over there – unless you have a good idea of the big picture. As I said at the outset, most of us are just too busy to attend to the many interlocked complexities of a good financial plan.

Too little advice…

All manner of investment advice, recommendations, suggestions, and pitches flood the business, financial, and social media channels without letup. This never-ending tide of instant information is a great boon for investors. Yet most of this advice is useless without your personal context.

On the other hand, subscription-based publicly available investment newsletters, advisories, and instant updates can be very useful sources of investment ideas and knowledgeable commentary and analysis. There are lots of good ones out there, but you’ll have to do some research to separate the great from the garbage. And again, keep in mind that the advice you get will be non-personal – it won’t necessarily apply to you or fit into your plan or portfolio. And sometimes, it can blow up in your face.

Just right…

Here’s where a qualified financial planner can help. Not only can they run your financial kitchen like a head chef, they’ll plan the menu, and tell the sous chefs what to do. Here’s what you should expect from your top financial planner:

  • Investment strategy. Build capital with a carefully structured investment program that includes portfolio analysis and design, investment strategy, regular reporting, monitoring and updating.
  • Retirement. Develop a long-term savings strategy built on sound portfolio-planning principles.
  • Tax-cutting. Look at your entire family financial picture as a unit, and work to minimize your overall family tax bill.
  • Debt management and personal cost-cutting. Reduce interest expense.
  • Insurance review. Ensure you have the right kind of insurance – at the right price.
  • Estate-planning. Maximize the value of your estate and ensure your wishes are met with referrals to qualified legal advice for proper powers of attorney, wills, and trusts.

How to find Goldilocks

Financial planners and money managers are compensated on a fee-for-service basis or on the basis of a percentage of assets under management. In addition to determining whether the planner/manager is tied to a specific product line (e.g., a mutual fund or insurance company), nail down specifics on how and how much you’ll be paying for their service. Watch for extras like transaction fees or administrative costs or performance bonuses that may not be part of the base fee. Get it in writing. And deal with reputable firms.

© 2014 by Robyn K. Thompson. All rights reserved. Reproduction without permission is prohibited.

© 2021 by Robyn K. Thompson. All rights reserved. Reproduction without permission is prohibited. This article is for information only and is not intended as personal investment or financial advice.

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