(Al’s Approach: Just a few of my core guiding principles when it comes to this stuff, so you can see if our philosophies line up)
The Advisory Business
- When a financial advisor recommends something, it’s normal to ask “what’s in it for me?” It would be equally enlightening to most clients to also ask “what’s in it for you?”
- In a society of over-abundance, we need to focus firstly on our more limited resources, such as those of time and effort.
- There’s no quicker test of an advisor’s sincerity than to see if they put their money where their mouth is.
- Never trust someone who knows where markets/investments are headed but who can’t tell you what their next illness will be or what will go wrong with the car next or the score of tomorrow’s ballgame.
- You can do anything in the world, but you can’t do it all. Therefore, prioritization itself is the priority at hand.
- You are in the driver’s seat. Your advisor should serve as a navigator. Our proper role is to tell you what we think, what we know, and what we would do in your shoes, to give you direction, but not order you around.
- Possibility and legality do not equal morality.
- If I don’t know, I’ll tell you so. I’ll then either research the item at hand until I do know or point you to the right source.
- Knowing why a recommendation was made is far and away more important than the recommendation itself.
Money in General
- Learn to (and teach your kids to): Give. Spend. Save. Invest. In that order.
- One’s ability to pursue dreams, take hold of opportunities, and handle disasters is inversely proportional to the level of monthly obligations.
- Money is neither inherently good nor inherently bad. But money is a powerful amplifier of the nature and purposes of the person wielding it.
- Money is only as good as what it can get.
- It’s not how much you have, it’s what you do with what you have that counts.
- Don’t sell yourself (eternal) short for wealth (temporary).
- Every decision involves a trade-off. You have to give something to get something.
- Money is only one of many resources that needs to be properly managed in a well-rounded life. We must also account for time, talents, relationships, skills, unique opportunities, heritage, …
- Earning money usually builds character along the way. Arbitrary wealth generally destroys it.
- On a balance sheet, a debt paid is the same as an asset gained and money saved is equal to money earned.
- You can ignore your finances forever, but only the consequences of ignoring your finances for so long.
- People who aren’t comfortable with freedom or its responsibilities will find ways to limit either.
- The decision to not make a decision about any given financial dilemma is still a decision.
Investing in Particular
- There’s no such thing as no risk. Finding the “right” investment is all about finding something with the type and level of risk you’re willing to accept.
- Debt is risk. Investments are risky. Having both at the same time is doubly risky.
- Investments are called vehicles for a reason. Just as when purchasing an automotive vehicle, it pays to have an idea of the kind of road you’ll be traveling and what activities you expect it to perform.
- It is at least ten times easier to destroy anything than it is to build that same thing. Therefore, in wealth-building, risk assessment is priority #1.
- The best investments in the world are found outside of Wall Street exchanges.
- Every investment should be allocated for a particular need in the future. The better known the nature and timing of the need, the better the ability to manage this investment.
- Guarantees are only as good as the person or institution standing behind them.