When I was a young boy, my mom and dad bought a baby blue cadillac. I don’t remember much about the car itself, but I do recall that it was a big deal to have a cadillac in the 80’s. I suspect it was similar to owning some of the luxury brands we know today.

The memory of this car is etched in my mind because it was the source of one of my mother’s favorite stories. She had been driving the car for a brief period of time, and the day came for her to take the car in to be serviced. Like any good cadillac owner, she took the vehicle back to the dealership.

Mom waited patiently while they performed the standard checks and adjustments on the car; however, when she got her bill, she “almost fainted.” Immediately, she knew there had to be a mistake. There was no way her bill should be this high for a simple service stop.

She approached the technician and asked him why her bill was so high. “Certainly, it doesn’t cost this much to do a quick service on this car,” she quipped. Without missing a beat, this mechanic looked my mother in the eyes and said:

“Mrs. Baker, if you can’t afford to drive a cadillac, you shouldn’t be driving a cadillac.” 

Of course, our cultural sensibilities are likely too brittle today for such a harsh comeback. Yet, I don’t think this mechanic was trying to be harsh. I’ve heard my mother tell that story countless times, and she never once mentioned anything negative about his tone or demeanor.

I think he was just keeping it real…and perhaps he’d heard the plight about the bill one too many times.

While his radical candor would definitely need a polish in today’s world, I like to think that more of us can use some plain truths when it comes to our money and investing decisions. 

Microwaveable Wealth

In the wake of the market drop of 2020, we’ve all been witness to a stunning recovery in asset prices. Investors that remained in the stock market, along with new investors desiring to “buy low,” have been largely rewarded. These rewards happened quickly, and as a result, I believe we are seeing a tremendous influx of a new type of investor class–the FOMO traders. 

These “investors” have been sitting and watching, but they can no longer contain themselves. They have to get into the game NOW. As you might expect, the financial industry is surging to meet this new level of demand:

Some of the sludge I see online these days makes me feel like Mugatu when he uttered the infamous line “I feel like I’m taking crazy pills!!”

Image of Zoolander movie character Mugatu

While I DO believe that the innovation we are seeing unfold at warp speed is exciting and a net positive for markets, I DON’T like some of what I’m seeing and hearing from users online. Overconfidence is running rampant, and there is a newfound obsession with stock selection over prudent investment strategy.

The fiduciary in me is a bit concerned. 

I’ve had several conversations recently with younger investors, and without exception, we have worked our way through a financial planning process. There are no exceptions to this rule if you are seeking financial advice from our team. 

We prioritize the process. Always. However, we are starting to hear more and more questions about individual stocks…

  • What stocks should I buy?
  • Do you have a specific stock picking methodology?
  • How do you time your buys and sells?

I love talking about investments. Yet, I feel that my first role as a financial advisor is to be honest with people– we cannot microwave our way to being wealthy. That’s not how this game works, and I believe that anyone giving investment advice to the contrary may have different motives. 

A Better Path

As a financial planner, I love the newfound interest in capital markets. I believe the surge in interest for investing access and commentary is giving our industry an opportunity to shine. There are so many brilliant voices in our tribe–creating content and delivering their message in unique ways. 

The connectivity of the internet is also allowing clients to have flexibility that they’ve never had before. If you are looking for an investment advisor or a retirement income expert, proximity is now a preference, not a requirement. One thing should remain in this search–the desire to find a financial professional that will be acting as a fiduciary at all times. 

Remember the story about my mom? 

I cannot tell you how often she shared that story about the mechanic. She couldn’t get over how frank he had been with her at that moment. Again, I think he was just keeping it real—at the expense of thoughtfulness and tact.

While my mom didn’t know this mechanic, what if she had? What if she and my dad had used the same mechanic for years, and they were on a first name basis with each other? My mom might have asked his opinion about the new cadillacs before making a purchase…and maybe the mechanic could have told her how expensive they were to maintain? 

This information may not have prevented my parents from making the purchase. Yet, I like to think that they would have been more equipped to make a confident decision. Afterall, don’t we all want to have confidence in our larger financial decisions? 

I believe clients should expect their financial planners to know them and know them well. I’ve been a financial advisor for over a decade, and I cannot think of a better path for planners and clients. I have written before that people don’t often know themselves when it comes to money, but I think it’s impossible to have trust in a financial planning engagement if there is no relationship. 

Information vs Technique

How invaluable is trust in the planning relationship? Think about how personal our money decisions can be. The majority of us can easily open our bank statements for the last 12 months and get an idea of our values and priorities. 

Despite the speed at which we can now seek information, I believe the human connection is more critical than ever with financial planning. Homo economicus doesn’t exist, no matter what your economic textbook says. We humans can be messy, and if information was all we needed—we’d all be skinny, rich, and happy. 

Think about 401(k) retirement plan providers for a moment. Most of these platforms have online access with a dashboard that gives almost complete control to plan participants. I’ve personally seen sites that offer retirement calculations that include estimates for social security income along with retirement withdrawals. 

This is amazing information to have. However, no website is going to be able to ask you how you feel about retirement. There isn’t a calculator that can discuss the pros and cons of paying off your mortgage in a personal way. It’s just math to the machines. 

Over the last 2 weeks, the majority of my time has been spent in conversations about matters of personal preference. Yes— we know what the math says. But, what’s the best answer for the client? What combination of financial moves will bring them the greatest sense of accomplishment and keep them on track to reach their financial goals?

These conversations should be the lifeblood of a fiduciary relationship. Personal financial planning is much more than just math or calculations on a spreadsheet. The numbers are important, but it’s the stories behind the numbers that truly matter.