Episode 1: Introduction

Episode 1: Introduction

Podcast 1

Episode 1: Introduction

In this episode I answer three questions:

1. Who am I?

2. Why do I believe an advisor is valuable?

3. What can you expect from these podcasts?

You will learn a little about who I am and why I believe that financial planning can be a powerful, positive force in your life. You will learn that the people who are best in the world at what they do rely in an advisor and you will be introduced to hub, spoke and tire conversations.

TRANSCRIPT:

Hi, I'm Tom Allison, your host for the Financial Wheel podcast. The purpose of these podcasts is to equip you to have the right conversations about your personal finances, no matter whether you're having these conversations with your financial advisor, with your spouse, with your partner. You want to have the right types of conversations. These are the conversations that allow you to cut through all of the noise, all the nonsense, all the gibberish that is out there coming across various media forms about how to manage your finances. Some of it's good advice. Some of it isn't. You want to be able to cut through and understand what's really important and what's useful for you. And the way to do that is to have the right types of conversations with the people that you want to have those conversations with. So the purpose of these, again, is to equip you to have the right conversations about your personal finances. Today, what I want to do is introduce you to the financial wheel podcast in order to do that. I'm going to address three questions. The first question is, who am I?

You're going to want to know a little bit about me, about Tom Allison, about my experience. Why is it that I might have something useful and valuable for you to listen to as we go forward in this podcast? So I going to tell you a little bit about who am I. Then I want to tell you about why I believe it's valuable for you to have an advisor. Why I believe it's valuable to have an advisor is the second question that we want to address so that you can understand whether you want to be working on this by yourself or whether you want to be working on it with an independent third party person. Then we're gonna talk about what you can expect from these podcasts. We want you to know what we're gonna be talking about going forward. So, you know, do you want to continue to listen to us or not? I think you're going to find that these are going to be very useful to you and that you are going to want to listen to us. Let's start with who am I. To begin with I'm a person who believes that people can enjoy a healthier, more satisfying life by learning how to use their money to support their lives. There are people out there who are giving financial advice on a regular basis who take the opposite approach. They're going to tell you either directly or indirectly that you should actually be living your life to manage your money. You should be living your life for the purpose of building up your wealth.

I don't think that that's the way you should do it. I think what you should be doing is managing your money to support your life. The people that I work with on a regular basis are people who most of them enjoy their work. Some of them not as much so, but most of them enjoy their work. But that's not their whole life. They also want to enjoy spending time with their families. For those who have young children, they want to be creating experiences for those children. They want to be creating memories for some of the older people. They maybe want to be creating memories for their grandchildren. They want to be involved in their lives. But there's more to it than that to have a totally balanced life that they're trying to create. They also want to engage in activities that help them lead a healthy lifestyle. They want to be involved in improving themselves through learning, through reading, through activities that enhance their inner growth. Most people want to be involved in their community in some way or another. They want to make a difference. They want to be connected with other people. And also, course, they have their work. They want to manage their portfolios correctly as well. So we want to create a life that's totally balanced and a life that you envision that you want to create for yourselves going forward. And we believe that you should be managing your money to support that life rather than the other way around. I'm also a person who, after more than 30 years of working with people in their money, have come to believe that money is the most powerful secular force in our lives.

Money tends to determine our jobs, our relationships. Who are the people that we hang out with? What do we do with those people when we're hanging out with them? It determines where we live in terms or the choices for entertainment or education and other things. Money actually infiltrates every single part of our lives and we need to understand that and appreciate that in all of its nuances in order to have the right types of conversations about our money. I'm a certified financial planner who believes that money can control our lives if we let it. However, if we are willing to take control and manage all the spokes of our finances in a coherent and balanced way, then money can be an effective tool to help us create the life that we envision. It can be a powerful tool that works to our benefit. I'm also a person who believes what my colleague Dick Wagner said is absolutely right. That money skills are the most important life skills of the 21st century. Think about this historically for a moment. People used to grow their own food. They would have fresh water that they would get from wells that they would dig. They would dig sanitation pits for their waste. They'd build their own houses. They would chop their own wood in order to heat their houses and to cook with. And this wasn't that long ago, really. In fact, prior to World War Two, most of the people in the United States lived this way.

But today we buy our food. We pay to have fresh water piped into our houses and wastewater piped out of our houses. We buy or rent our shelters. We use gas or electricity that we pay for for our heating and our cooking. You start to see that these basic survival skills that people used to provide for themselves, we now provide for ourselves by having money. So the way that you manage money is becoming one of the most important survival skills for the 21st century. I'm also the person who created Allison Speilman Advisors a financial life planning firm in Bellevue, Washington. This firm is founded on the idea that managing your finances in the right way can be one of the most powerful positive effects in your life. So we want to encourage people to learn to manage their finances, to build the lives that they vision for themselves and for their families. So that's a little bit about who I am. So the next question is why do I believe an advisor is valuable? Well, let me tell you a story that happened to me back in 1989. The PGA Championship was being played in Sali, Washington, just outside of Seattle. And on Monday, a friend of mine called me and said that he had tickets to go out and watch the Monday practice rounds. So I went with him and spent the day out there watching the best golfers in the world plying their craft was really kind of a fun day. But the highlight of the day happened shortly after lunch when we were standing around the ninth green.

And as we were standing there, Tiger Woods came walking up the fairway to the green. And I watched him throw ten golf balls into the sand trap. And he hit five of those golf balls out. Beautiful shots, but then turned around and started talking with this guy who had been walking with him. It was his coach. It was his advisor. It was the person who was totally interested in helping Tiger Woods be the best that he could be. And he could see things that Tiger couldn't see himself. And they talked about a little bit. And then Tiger went into the sand trap and hit the next five balls out of there. Even better than the first. Which I didn't think was even possible. That's when it dawned on me that I was standing here watching a man who at the time was the absolute best in the world at what he did. And he was relying on an advisor. He was relying on a coach who was watching him and observing him and telling him about things that he couldn't see about himself. And in the exact same way, we were managing our own finances. There are things that we're doing, possibly mistakes that we're making that we're not able to see. We're too close to it. We're involved. And there's a real value in having somebody who is genuinely interested in your financial welfare, watching over you and talking to you and sharing insights with you to help you manage your money a little bit more effectively.

So there's that advantage. The second reason that I believe that it's valuable to have a financial advisor actually comes from a article that was published in the Journal of Financial Planning in November of 2014. Just a little background on that. The Journal is actually a peer review journal. So what that means is that academics do a study in depth, in detail. They write this study up. They submit that to a panel of their peers who review it, critique it, send it back to them to make any adjustments or corrections, verify that the facts are accurate. And then when it's in place, then it's able to be published. So this is a peer review study that was done by a couple of PHD academics.

And what they were looking at in here was to determine the increase in people's retirement wealth under four different scenarios. So the first group that they looked at were people who manage their own finances but did not have any type of a plan. They didn't calculate out what their retirement needs were going to be. The second group were people who manage their own finances but did plan out what their retirement needs were going to be and developed a plan to build up those assets. The third group were people who worked with a financial professional but did not have a plan. Typically, this would be a financial professional whose primary objective was to sell certain financial products, but they did not calculate out what somebodies retirement needs were going to be. And then the fourth group were people who worked with financial professionals, but they did have a plan. They did figure out what somebodies retirement needs were going to be and how they could save money to do that. So that was the setup that they looked at. And there's a lot of detail, as you can imagine, in an academic report. But here's the bottom line. The people who were self directed but did not have a plan to increase their retirement wealth over a 10 year period by a little over sixty two thousand dollars. Those people who were self directed but did have a plan increase their retirement wealth by a little over a hundred and sixty three thousand dollars. So almost one hundred thousand dollar improvement just by having a plan for those who worked with a professional and didn't have a plan, it increased by a hundred and twelve thousand dollars for those who are working with a professional and did have a plan.

It increased by two hundred and forty seven thousand dollars. You can see there is a huge benefit of working with that professional. Of course, the question is why? And the first instinct is, well, they must have had a much better performing investment portfolio. In fact, they did, but that was sort of a minor part of it. Then, by the way, the reason that they had a better portfolio was not that they chose better investments, but they avoided making mistakes like moving out of the market when they shouldn't move out of the market, moving in, trying to time it, reacting emotionally. That was the biggest benefit that the financial advisor gave them in managing their portfolio was to keep them constant and consistent and get through the emotional highs and lows. But the other benefit just comes from the fact that you're talking to somebody who is genuinely interested in your well-being and can take your ideas and your thoughts and sharpen them to see where the rough edges are in those ideas and smooth those rough edges out. So working with the financial advisor, just like Tiger Woods, working with his coach and worked out his rough edges, working with the financial advisor can help work out the rough edges in your personal financial management. And as you can see, it has a tremendous financial benefit going from an increase of sixty two thousand dollars to an increase of two hundred and forty six thousand dollars.

So the third reason that I think it's valuable to work with a financial advisor comes from a study that was done by the Financial Planning Standards Council in Canada. This is essentially the governing board for certified financial planners in Canada. And what they did was to conduct a survey of people who were working with a certified financial planner versus those who were not working with a certified financial planner. And the questions they asked him were more of the intangible questions. For example, they asked, do you feel that you're on track with your financial affairs? And 81 percent of the people who worked with a financial planner said yes, as opposed to 44 percent who did not work with a certified financial planner. So you can see that there is just a positive feeling that you're moving forward when you're working with a certified financial planner. They asked, are you on track with your retirement? 50 percent of those working with a certified financial planner said yes, as opposed to 22 percent who were not working with it. Are you on track with your savings? Again, a much bigger percentage of the people who are working with a certified financial planner said yes. Can you deal with the bumps in life? This is really an important one because a lot of people don't think about that. They think about, yeah, okay, I'm saving up enough for my retirement and it looks like maybe I'm saving enough for my kids college education.

But what about those hiccups? What about those bumps that happen in life? What about those unexpected setbacks? Could I handle those things? And people who are working with a certified financial planner overwhelmingly said that they were more prepared and more comfortable with those bumps that come along in life. So you can see that there's a real intangible benefit of feeling of well-being, and that's important. You want to be comfortable about your finances, you want to feel like they're in control, you want to feel like they're working for you rather than controlling you. And what this study in Canada has shown is that people who are working with certified financial planners actually feel that way. So there's three reasons that I believe you should be working with a certified financial planner. First of all, it's somebody who can take a look at what you're doing from an outside perspective and possibly identify mistakes. Maybe more importantly, just a little nuance adjustments that you can make that can make a huge difference. Secondly, we've seen that there's a tangible financial benefit to working with the right kind of advisor, the kind of an advisor who's genuinely interested in your concern and puts your interest and your concerns ahead of their own. And then third, we've seen that there's an intangible I just feel a lot better and I feel a lot more confidence about my finances when I'm working with a financial advisor.

So the third question is, what can you expect from these financial podcasts? Ya you want to know what we're gonna be talking about going forward so that you know, whether you really want to continue to listen to us, and I think you're going to want to. So what we're going to be talking about are three types of conversations that you should have. They are hub conversations, spoke conversations, and tire conversations in the next three podcasts. I'm going to go into these in great detail and we'll do sort of a deep dive so that you understand what they are. But let me just give you an introduction to each one of these right now. So hub conversations are at the core is what we're going to be doing. Well think about a hub I mean a hubs at the core of a wheel. Right. And the thing about a hub is that it has to be strong. It has to be sturdy. It has to be really solid. So we're going to talk in the next podcast about how you make that hub really strong and really powerful. The next conversation are spoke conversations. Spokes are the things that you probably think about more likely when you think about financial management. They are the things like cash flow management and balance sheet management, how you manage and use debt tax management. They flow into what type of generosity planning do you want to do? Estate planning. They get into the record keeping.

They get into risk management and portfolio management and then all the details involved in that. Those are the spokes of your personal financial life. And they need to be obviously connected to the hub in a really solid way. The last one are the tire conversations. These are the areas where we start to take a look at what kind of progress are you making. You're getting where you want to go or you're going down the road that you want to go while you're going down the road. What kind of pitfalls are you going to run into and how are you going to handle those? What are the obstacles that you're going to be facing? And in our fourth podcast, we're going to talk about that, especially those obstacles in a lot more detail. And then, of course, we want to talk about. Are there any changes? Are there any adjustments that needed to be made? And is there a better way of doing it? So what you can expect going forward are conversations about the hub, about the spokes and about the tire. Now, I'm going to share some of those with you, but I'm also going to be bringing in other people, people who have special expertise in these areas, especially in the spoke areas there. So you can benefit from that. What you're going to come away with is the ability to have the right types of conversations with the people that you want to have those conversations with, with your financial advisor, with your spouse, with your partner.

You're also going to learn a few financial skills along the way. As I mentioned, these are the most important survival skills for the 21st century. So we want you to pick up on some of these financial skills as we go. These are podcasts that are going to be very useful for people who want to be working with an advisor and want to know if they have the right advisor. You want to know that your advisor is willing to have these conversations with you and engage in these conversations with you in a deep way. So going forward, we're going to be having Hub conversations, spoke conversations, and tire conversations. And I think you're going to find it very enjoyable. If you like more information about today's podcast, you can go to financialwheel.net. That's financialwheel.net. At that Web site, you'll be able to actually see the studies that I referred to in this podcast. You can get a transcript of this podcast. You can learn about future podcast. You can also learn about other things that will be of use to you from Allison Spielman Advisors, for example, the learning labs that we do that you may be interested in attending. So take a few moments. Go to financialwheel.net to learn more information. In the meantime, keep your conversations constructive and supportive.

RESOURCES



The Value of Financial Planning

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A Comparison of Retirement Strategies and Financial Planner Value

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TEST THE WATERS

Want to test the financial planning water? Click on the links below and spend no more than 5 minutes completing the two surveys. When you send them in, we'll respond with information and resources to help you think through the issues and transitions you've identified.

Life Transitions Survey »
Financial Satisfaction Survey »


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  • Date
    July 12, 2019
    We start this episode with a story about a young woman who thought she had to make a job decision but soon realized she was making a values decision. My guest is Lenora Edwards; a business owner who does business development consulting for entrepreneurs & executives. Lenora and I explore the lessons from our opening story about creating life balance in this “Hub” conversation.
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Financial Satisfaction Survey

 


Directions: The statements below will help you to think about and assess how satisfied you are with many aspects of your financial life. Indicate your level of satisfaction for each statement with stars.
(1 star = "Not Satisfied", 3 stars = "Moderately Satisfied", 5 stars = "Very Satisfied")

I am satisfied with...

1. ...with my ability to meet my financial obligations

2. ...with the income my current job or career provides me.

3. ...with my spending habits.

4. ...with the level of debt I carry.

5. ...with the “extras” that I am able to buy for myself and/or loved ones.

6. ...with the level and quality of insurance protection I currently have.

7. ...with the amount of money that I save and invest on a regular basis.

8. ...with my current investment choices.

9. ...that I am on track to build a sufficient retirement nest egg.

10. ...with the level of employee benefits I receive.

11. ...with my style of personal bookkeeping and financial record management.

12. ...with my ability to provide financial help to family members.

13. ...with my estate plan.

14. ...with my level of charitable giving.

15. ...with the level of financial education I have attained.

16. ...with how I respond emotionally to my personal finance issues.

17. ...with my ability to communicate about my financial matters.

18. ...with the feelings I have about my money life.

19. ...that financial issues do not cause stress or strain in the relationships that are important to me.

20. ...with the working relationships I have with my financial service providers (i.e., insurance agent, banker, broker, financial planner, accountant).


© 2002 - 2018 Money Quotient, Inc. All Rights Reserved. This document is available via licensing arrangements with Money Quotient and is protected by federal copyright law. No unauthorized copying, adaptation, distribution, or display is permitted - moneyquotient.org.

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Life Transition Survey

 


Directions: In each section, select the transitions that you are currently experiencing and those you are likely to experience in the future. In addition, check transitions in the short to mid-term and long-term columns that you either hope to experience or anticipate with concern.

Work Life Transitions

1. Change in career path:

2. New Job:

3. Promotion

4. Job loss

5. Job restructure

6. Education / retraining

7. Sell or close business

8. Transfer family business

9. Gain a business partner:

10. Lose a business partner:

11. Downshift / simplify work life

12. Sabbatical / leave of absence

13. Start or purchase a business

14. Retire:

15. Phase into retirement

16. Other


Financial Life Transitions

1. Purchase a home:

2. Sell a home:

3. Relocate:

4. Purchase a vacation home / timeshare:

5. Re-evaluate investment philosophy:

6. Experience investment gain:

7. Experience investment loss:

8. Debt concerns:

9. Consider investment opportunity:

10. Receive inheritance or financial windfall:

11. Sell assets:

12. Other:


Family Life Transitions

1. Change in marital status (marriage):

2. Change in marital status (divorce):

3. Change in marital status (widowhood):

4. Expecting or adopting a child:

5. Hire child care:

6. Child entering adolescence:

7. Child with special needs:

8. Child w/pre-college expenses:

9. Child going to college:

10. Child getting married:

11. Empty nest:

12. Family special event (Bat/Bar Mitzvah, anniversary party, trip):

13. Helping and/or gifting grandchildren

14. Concern about aging parent

15. Concern about health of spouse/partner or child:


Legacy Life Transitions

1. Increase charitable giving:

2. Give special financial gifts to children/grandchildren:

3. Give parental pension (monthly stipend):


© 2002 - 2018 Money Quotient, Inc. All Rights Reserved. This document is available via licensing arrangements with Money Quotient and is protected by federal copyright law. No unauthorized copying, adaptation, distribution, or display is permitted - moneyquotient.org.

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