231 | Missing Chapters

I’m writing a book that’s been in my head for a decade, almost two.

It started as thoughts and observations that I couldn’t turn into words.

Then it was actually helping people with their finances.

Then it was helping people and getting thoughts into words.

And the combination of helping and writing is when the book started to take shape - an endless cycle of practicing what I preach and preaching what I practice.

And all of it seems to be helping people connect the dots.

But inevitably, there are a couple chapters that leave people scratching their head because the practice isn’t quite the preaching.

Because right now, in my sliver of the industry, some sections of the book can’t be published.

The missing chapters would be too hard for the current publisher to sell.

Many days those missing chapters feel like they’re a silly thing to hold so tightly.

“Just get over them, they are too petty to make a stink.”

“Someone would have already written them if they were actually that important.”

But then there are the days that I see someone longing for them or that I have to recite their placeholder chapters as if they are the real thing.

And those are the days they seem like the key that unlocks the future that I so desperately dream of building.

I want to believe, and on the best days do believe, that the missing chapters will make it a masterpiece.

217 | Matter-of-fact-ness

Our finances beg us to pen an epic fiction about them.

"More income is the only way forward."

"If we aren't saving, we're falling behind."

"We can't afford to be generous."

"We have to keep cutting back until there's nothing left to cut."

"Our investments might go to $0."

Inevitably, these fictions move us from matter-of-fact understandings of our money to emotionally-charged misunderstandings.

Sadly, the financial services industry tends to ghost write more fiction - projecting unknown futures or marketing silver bullets.

Or confuse us with non-fiction - jargony post-mortems on market moves or urgent updates on tax laws and account types.

One adds chapters to our fiction and the other leaves us with nothing but the fiction in our head.

Somehow we have to add a dash of matter-of-fact-ness to disarm fiction's ability to exaggerate, invent, and pretend.

Some matter-of-fact-ness looks like...

Aggregating our accounts in one place.

Identifying when income exceeds spending, and when it doesn't.

Tracking where our dollars go.

Noticing patterns over the course of a year or two.

With a little bit of fact, our negotiations change, our spending habits change, our investment decisions change, and our saving priorities change.

And the fiction captures our imagination less and less.

213 | Do We Have to Tell?

After years of long hours and burn out, a close friend shared that their spouse was pursuing a change at work.

The change would mean fewer on-call nights, more time with family, more baseline energy, relief from a draining routine, more unity in their relationship, and, not surprisingly, a little less income.

While celebrating the promise of relief and extra capacity, the friend said, "But we don't want to tell our financial advisor because it's not in line with the plan that he laid out and we won't be able to save as much as before."

I'd like to extend the benefit of the doubt to the advisor and imagine that our friend was exaggerating, and yet, it's a stark reminder of the fundamental flaws in the financial advice industry.

Charging a fee on managed assets means that good news for one party might not be good news for the other.

And publishing financial "plans" makes some forms of good news seem more like a misstep than progress.

Keeping good news quiet is no way to refine our relationship with money.

That's why we do things a little differently here.

203 | Frustrated Toddlers

Brace yourself…

“64% of people with a financial advisor feel unsatisfied in terms of ‘having someone to talk to about money’”.

People with a financial advisor feel unsatisfied.

I appreciate that we have a stat to back it up, but I felt it in my gut the moment I became an adult and realized money wasn't just math.

We all feel it.

Nagging questions of "how do I spend well?" or "am I being responsible?" or "how do I know if I'm on track?” that go unanswered, while we rehash the benefits of a Roth IRA or speculate on the chances of a recession in the next 12 months.

Of course, we're unsatisfied.

Like a frustrated toddler searching for the right words, but only getting another snack so the peace is kept.

What else do we need for permission to do things differently?

197 | No Antidotes

There are no trade secrets.

Or silver bullets.

Or wizards behind the curtain.

The trouble is that we keep hoping a special investment or slick tool or fancy calculation will set us free.

But these things aren’t the antidote for all our uneasy feelings about money.

They're just saturating the market and our minds and leaving us without a clue of how to apply them to our lives.

It's not the best product, tool, or calculation, that we need.

We need help putting a stake in the ground, taking a couple steps, reflecting on what happened, and then repeating that cycle...

Forever.

196 | Would You Manage Investments?

I don't manage investments.

Of course, I give advice on investments - advice that rivals (and beats!) folks that manage investments.

But I don't manage investments.

If I manage investments, the investment strategy becomes a golden calf.

If I manage investments, the cost of advice skyrockets as you save.

If I manage investments, you pay way more or way less than your neighbor will pay.

If I manage investments, we're going to spend a lot of time doing things that can be done for us for free.

If I manage investments, inevitably I'll only help the wealthiest get wealthier.

If I manage investments, I limit who I can help before they've even raised their hand.

If I manage investments, I ignore what actually changes people's relationship with money.

Now that I’ve laid it all out, would you manage investments?

184 | Spokes and Hubs

Investment management. Insurance products. Tax planning.

These are the spokes that our industry has turned into hubs of our relationship with money.

By marketing them. By charging for them. By discussing them ad nauseam. By making them more complicated than they ever needed to be.

When you try to make a spoke the hub, the bike won’t go.

That’s why we still struggle to answer the timeless, nagging questions…

What counts as progress?

Am I being responsible?

Am I doing this the right way?

How will I know when I have enough?

What does financial independence feel like?

We can answer these questions when we continually revisit where we’ve been, where we are, and where we’re trying to go.

We need the right hub, so the spokes can be spokes.

182 | Creating Space

Everything you need is at your fingertips…

Good questions to reflect on.

Endless lists of pros and cons compiled by strangers.

And all the potential tactics your heart could desire.

But access to these things isn’t valuable.

The value is in creating space to actually reflect on the questions, in order to personalize the pros and cons, which inevitably clarifies if any tactics are needed.

Too often, we chase tactics based on someone else’s pros and cons without creating the space to reflect on the question.

178 | Why So Serious?

The secrets to being good with money aren’t much more than…

Income that gets more fun to generate with each passing year.

Spending as much as you can on things you love and as little as possible on things you don’t.

Saving often enough to prove to yourself that you know how to live within your means.

Investing that cares for some basic principles and then is really patient.

Beyond that it’s mostly emotions, personal circumstances, and dealing with an uncertain future.

None of that requires a conference room. A market update. An investment product pitch. A special type of account. An insurance premium. Or a conversation that makes you feel lost.

We have made this whole money thing more serious than it needs to be.

169 | Discussing “Enough”

If we're not legitimately interested in discussing enough, then we're not going to be a good fit.

That's not meant to be judgy or snarky.

Only an honest admission that I don't like doing less than my best work and my best work is revealed when we're trying to identify enough together.

That doesn't mean we'll know a number on Day 1 (because there is a never a precise number!).

But it does mean that every meeting, conversation, and interaction will be designed to further refine our understanding of enough.

I guarantee the way we do things won't feel like what the financial services industry has trained you to expect, because enough doesn't tend to reveal itself in investment updates, insurance analysis, estate planning, or even tax planning.

If you're up for starting the journey, then let’s do it together.

It you're hesitant, then remember to come back later when you're still looking for enough.

161 | When to Run the Other Way

When someone shows you projected levels of spending and investment returns for the next decade or two or three, that's your signal to run the other way.

They're making the future sound more predictable than it will ever be.

Or they've not spent enough time reflecting on the past to appreciate how our financial lives actually work.

158 | It Doesn’t Bother Me

I'd rather us knock it out together.

And "it" could be a lot of things - but usually it's the things that have a knack for staying on the to-do list indefinitely.

Of course, it might mean I'm watching you reset a password or type in your name. It might mean we're sitting on hold together. It might mean we're both trying to figure out how something we've never done before actually works.

Even if a moment or two feels awkward, I still want to do it together.

Because there is always going to be a grenade planted somewhere in the process - teeny parts of the financial world that derail our most honest efforts or plant seeds of confusion and doubt that make us wonder what else we don't know.

Inevitably, if we do it together, it will go faster, there will be fewer errors and second-guessing, our relationship will deepen, and it will feel like we've made real progress.

So no, it doesn't bother me to do it together.

157 | My Role as I See It

To improve individuals’ relationship with money by making finances simpler and breaking down the taboo nature of money.

154 | Why I Am Here 1.0

Everyone has what it takes to be good with money.

And being good with money is so much more than accumulation.

But inevitably, being good with money is not as simple as it should be.

People who we love make it complicated.

People we are around make it complicated.

People who write the rules make it complicated.

Even people who give advice can make it complicated.

Instead of knowing we have what it takes, we’re left trying to make sense of it all.

And everyone is trying to make sense of it all.

Being good with money is simple, but simple is hard.

It comes down to four things.

Generating income in a way that is sustainable.

Spending in a way that drives contentment.

Saving in a way that is accessible.

Investing in a way that is patient.

Yes, being good with money is that simple.

But it won’t feel that way until you can see it clearly.

And making it clear is the only reason why I am here.

153 | Modern-Day MapQuests

A "financial plan" - projecting your future income, spending, saving, and investing returns for the next decade or two - has been the first solution offered by the financial services industry in the post-stockbroker world.

And it seems like something that would be helpful.

But creating a "financial plan" is like printing one set of MapQuest directions today that you'll use for the next decade of road trips.

That's why they don't work like it seems they should.

152 | Freebies and Commodities

Carl Richards summarized the tension of a business model based on assets under management too concisely, not to share...

"It gives away everything that is valuable for free, and charges for the one thing that is a commodity."

That’s no way to run a business.

So, we don’t.

151 | No Credit Given

Another challenge with Monte Carlo simulations is that enormously positive actions don’t get any credit.

Changing careers to one that is a better fit.

Paying off a pesky debt.

Changing a spending habit.

Freeing up time by paying for someone to help you.

Building up cash on hand for a season.

Improving how you communicate about money with a spouse.

Increasing your level of generosity.

Every single one of these improves your relationship with money.

But if the market moves in the wrong direction in that period, the Monte Carlo will tell you you've gone backwards.

144 | You’re Paying for One Thing

You’re paying me for one thing – to help you do something that you have been unable to do yourself.

It’s up to me to understand what you’ve tried to do or want to do.

It’s also up to me to help you figure out how to do it.

But I’ll spoil the ending…

There’s a good chance the way to do it has already crossed your mind or is simpler than you imagined.

This creates a tension – why am I paying for something simple or that I “could have done on my own”?

But just because it’s simple doesn’t mean it’s easy – you’d have done it by now.

And a mental list of hypothetical solutions isn’t the same as knowing the solution – it just seems that way once you’ve heard it.

If the simple answer brings you relief, then we’ll be a good fit.

If it leaves you underwhelmed, then it’s probably going to be a tough go for us.

143 | A Tough Look

Baked into a Monte Carlo simulation is the reality that there could (will!) be seasons of abysmal returns at some point in the future.

The purpose of the exercise is to see through those seasons and still assign a probability of success that funds will last beyond those tough times.

But the problem is that once you’re in that season – the season that you predicted would happen – your single metric for measuring odds of success fails you.

“We were 95% certain we can handle the bad times, but now that we’re in them, we’re only 70% sure we can handle them*.”

That’s a tough look – if you knew something would happen, how can you be less certain of the future once it actually happens?

*I’m not speaking to legitimate qualitative things that might change an outlook on the future, I’m only speaking to the way the math actually works with Monte Carlo simulations.

142 | Abstraction At It’s Finest

Monte Carlo simulation is a tool used to run thousands of scenarios of the future to predict whether someone’s assets can last a lifetime regardless of future investment returns.

There are plenty of downfalls to the tool and one is its ability to abstract our real life experience with money.

In a particular instance with a client, every scenario we showed - good returns and horrible returns - confirmed a near 100% chance that the client would not run out of assets from age 65 to age 95.

As we turned to questions and comments, the first reflection was the following…

And I can’t make this up…

“Well, we’ve got to do something because we’re going to run out of money in July.”

I can’t fault the client.

The problem is a direct result of trying to summarize how well we are generating income, spending, saving, and investing to a single number that ends in a percentage sign.

And in this particular case, the client’s bank account was going to run out in a few months if it didn’t figure out which investment account to tap first for funds to replenish it.

A 99+% chance of success in the long run means nothing when we don’t know the first action step for the problem in front of us.

In fact, it often compounds the issue by suggesting everything is OK, when absolutely nothing feels OK.