2 Year Anniversary

Young, bootstrapped small businesses eventually become a victim of their own success.  The business outgrows the business owner and he can no longer "do it all".  It's time to hire some help. 

This week marks the 2 year anniversary of The Financial Zen Group (can you believe it!?).   That feels like an appropriate time to legitimize the "Group" in The Financial Zen Group.  

James Carnahan starts this week.   He's part of a husband and wife team who have provided virtual assistant services exclusively for financial planners for over 25 years - check em out here.

He will handle all of our administrative tasks - paperwork, transfers and meeting prep/follow up to start with.   And because he only works with financial planners, he already know all the technology that we use which means he'll add value immediately.

This will allow me to spend more of my time doing the important stuff - talking to clients and  developing and implementing financial plans. 

You can reach James at (330) 310-3826 and james.carnahan@financialzen.com

We Make It Look Easy

There once was a man who had a squeaky hardwood floor. 

For months and months he tried to fix it.   But for the life of him he couldn't get the floor to stop squeaking. 

So he finally called a carpenter.

The carpenter came in, looked at the floor for a few minutes, took out one nail, hammered the nail into the floor and left.

Sure enough, the floor was fixed.  It didn't make a peep after that.

A week later the man received the bill in the mail.  It was for $200.   He was surprised that a few minutes of looking around and one nail cost $200.  So he called the carpenter asking for a detailed invoice. 

A week later the invoice arrived.  It read:

One nail……… $1
Knowing where to hammer the nail…. $199

The professional always makes it look easy because she knows exactly what to do.  But she only knows exactly what to do because she spent thousands and thousands of hours trying everything else first. 

Do you have thousands of hours to try everything else first? 

Buyer Beware

Caveat Emptor.    Buyer beware.

If someone's job title contains the word "Advisor," you would think they'd be required to give you good advice.   Or at least advice they BELIEVE is good advice. 

It's so obvious everyone assume that's how it works. 

It doesn’t.

If your "Financial Advisor" works for a large Wall St firm or insurance company - Wells Fargo Advisors, Morgan Stanley, Merrill Lynch, Ameriprise, Northwestern Mutual, AXA, etc. -  he is NOT legally required to advise you in your best interest. 

Let's say Mutual Fund XYZ sucks.  And your "financial advisor" knows it.  But XYZ pays a big, fat commission that will help him win a company sales contest.  So your "advisor" recommends you buy it anyways.   That's totally okay in the eyes of the law.

Caveat emptor.  It's up to YOU to figure out that it sucks and he's trying to win a sales contest.

Good luck!

The Dept of Labor tried to change this.  They created the Fiduciary Rule which would require "advisors" at big brokerage & insurance companies to act like independent financial planners who are legally required to put their clients' interests above their own. 

It was supposed to become law last year.  Then it was delayed.  And last week it all but died.  The 5th Circuit Court of Appeals decided investors should fend for themselves

Buyer beware. 

Only fiduciary financial planners are legally required to put your interests above their own.  And only fiduciary financial planners are required to file a form called an "ADV Part 2" with the SEC each year. 

So if you don't want to figure out if XYZ is great or your guy is trying to win his sales contest, just ask to see their ADV Part 2.  If he doesn't have one, move on.

Here's mine.

Consider The Source

6 hours of my "reading time" every week is dedicated to honing my craft- staying on top of industry trends… researching new financial planning strategies… studying client psychology… etc. 

What do I read, you ask?

Advertising, of course.

…I dive deep into the 4-page annuity advertisements in my industry rags. 

…I devour "Top 5 Mutual Funds" articles in Money magazine. 

…I'm glued to the CNBC commercials slinging gold with limited-offer "Patriot Coins." 

Why do I read advertising to educate myself?  Because the best way to learn is from someone trying to sell you something.  (A universally accepted "sarcasm font" is way overdue, don't you think?) 

Personal finance is complicated.  It's too complicated… and too confusing… and let's be honest - too boring -  for most people to be motivated to educate themselves.  The financial industry takes advantage of this.  

  • The company hustling gold hopes you don't know their Patriot Coins are a terrible investment.
  • The Pre-IPO investment company hopes you don't understand the investment and liquidity risk of investing in pre-IPO companies.
  • The insurance company hopes you don't know that whole life policy is really expensive insurance and a really lousy investment.

But they gotsta eat too, ya know?

The point is to consider the source.  If you are "learning" from someone trying to sell you something, take the time to educate yourself outside of what the salesman… or advertisement… or commercial is telling you.

After that, if you've just got to have those Patriot Coins then more power to you. 

4 Tips to Achieve Your 2018 Goals

It's week 2.  Still going strong on your 2018 goals?

Below are 4 tips to keep your momentum going when February rolls around and your shiny, new motivation starts to wear off. 

  1. Make your goal specific.  "Save more" isn't as motivating as "Saving $1,000 per month".  A measurable goal lets you know if you've crossed the finish line.   And if you haven't, you'll know how close you are… which then motivates you to keep going and finish. 
     
  2. Set "input-based", not "output-based" goals.  We humans think we control the output.   We don't.  We only control the input.   The trick is getting the inputs right, so the desired outputs follow.  Setting goals based on inputs will make you accomplished even if the desired output doesn’t follow immediately.  A better goal than "losing 10 lbs" is "6 days a week, I'll eat only fruits, veggies, whole grain carbs, lean protein and healthy fats."  
     
  3. Track your progress.  Jerry Seinfeld has a calendar.  Every day that he sits down to write jokes, he X's off the day.  His calendar is one long chain of X's.  And it's not because he loves writing jokes every day.  Like all of us, he has "those" days.  But "breaking the chain" is worse than sitting down to write.  So he writes…and he X's.   If your goal is to "exercise 4 days a week," print off a calendar and X off every day for every week you work out 4 times. 
     
  4. Reward yourself.  Achieving goals takes discipline.  And discipline is hard work.  If it wasn't, we'd all be billionaires with six-pack abs.  Reward yourself for achieving your incremental goals (daily, weekly, monthly).  On the 7th day, eat pizza or a sundae or whatever it is you've sacrificed that week.

Consider an "I will spend less" resolution.    Applying these tips, it becomes "I will bring my lunch to work 4 days per week."  It's specific, input-based and leaves a day to eat out to reward yourself.  All that's missing is a calendar and a chain of X's…

Goals for 2018

Hope everyone had a nice New Years.   It's January 4th, and the world is back to work.

My 2018 planning is complete, so I thought I'd share my 2018 New Year's "Resolutions" (aka Goals).

  1. Hire an assistant. You don't pay me to fill out paperwork.  You pay me to guide you towards your best financial lives.  An assistant will free up time so I can spend it in the most impactful ways.
     
  2. Onboard remaining clients to the new service model.  2017's focus was to upgrade my service model to something my clients are stark, raving mad about.  How I serve clients - contact frequency, service offering (retirement, college, investments, etc.), easy-to-use client technology - is my "product."  Based on clients who have upgraded and embraced the technology, I've nailed it.  Now I need to chase down clients who haven't been quite as responsive. 
     
  3. Launch my marketing campaign.  With a product I am proud of, I'm excited to share it with the rest of the world.   "To help and educate as many people as possible" has been part of my mission statement since 2008.  It's time to help the masses.
     
  4. Hire a junior financial planner.  The strategy behind your financial plan is the hard part.  Taking that strategy and putting it into a client-friendly design is labor-intensive, but not difficult.  That's the perfect place for a junior planner to learn the ropes and prepare for taking on client relationships. 
     
  5. Take guitar lessons.  I've been self-taught for 4 years.  It's time to leverage an expert. 

There are many other smaller goals I've set, but those are the big 5.  If I accomplish nothing else this year than those 4 goals, I will have a successful 2018.

Now it's your turn.  What are your big goals for 2018? 

Send them my way.  I would love to hear from you!

Reflections on 2017

The week of limbo between Christmas and New Year's is a time of reflection. 

Think about what you accomplished in 2017.  Also, what didn't you get to?  I find this simple exercise often births the following year's goals. 

Accomplished: Financial Zen Education.   I sent my educational newsletter every Thursday for 52 weeks.   Not only did I create a year's worth of content for people's reference in the future, but hopefully my readers learned a thing or two along the way. 

Didn't get to: Hiring an assistant.  Between new clients, retiring clients and everything in between, I was too busy to hire an assistant (who ironically would free up my time). 

Accomplished: Mediated 365 times.  It helped keep my head on straight working 80 hours a week. 

Didn't get to: Guitar lessons.  I still practiced every day, but never leveraged an expert.

Accomplished: Saved 20% of my earnings.  Between a ring, a wedding and a honeymoon, it won't all go to retirement, but I saved 20% nonetheless.

Didn't get to: Automatic savings.  The 20% I saved was me moving money every month.  I know I could have saved more if I had automatically transferred money to my savings account every month.

Accomplished: Got my CFP credentials.   $5,190.   21 months of college-level study.   6,000 hours of experience.   And 12 years in the making.

Next week, I'll reflect on what I want to accomplish in 2018.

How'd your 2017 go?  Write me back and let me know!  I would love to hear all the wonderful things you accomplished last year!

Thanksgiving Gratitude

Thanksgiving may be the time we verbalize our gratitude, but my gratitude for you is something I reflect on every day.

Part of my morning ritual is writing down 3 things that I'm grateful for and 3 things I'm looking forward to that day. 

A disproportionate amount of my gratitude and eager anticipation each morning is focused on you.

Here are some examples (names changed): 

  • I am grateful John "feels on top of things, like never before"
  • Today I'm looking forward to explaining Tim and Lisa's retirement distribution strategy, so they won't worry about retiring anymore
  • I'm grateful for engaged, enthusiastic clients like Sue
  • Today I'm looking forward to showing Rob and  Mary how they'll send Bobby to college

So if you've ever felt your ears burn at 5:45 am, now you know why.  

I'm grateful you've given me the opportunity to help you.

I'm grateful for your patience while I got The Financial Zen Group up, running and dialed in.

I’m grateful that you've allowed me to live my dream

And I'm grateful that you are in my life.   You've helped me to grow - not just professionally, but personally as well and I'm a better person because of you. 

Thank you, thank you, thank you!

Enjoy your turkey and football (and nap) today!

Rick Valenzi, CFP

The year was 2005 and the light bulb had gone off  - I was pretty, kinda, almost positive that my destiny laid in financial planning. 

After making a few blind wrong-turns early in my career, I wanted to make sure.   I cold-called financial planners for informational interviews.  I did a bunch of online research.  I read books like "So You Want to Be a Financial Planner". 

And when I was 95% sure of my decision, I took the last leap and spent $3,395 for my CFP coursework materials. 

What's a Certified Financial PlannerTM? It's the most well-respected and well-recognized designation in personal finance. It is the gold standard of financial planners.

One of the requirements is passing a rigorous educational program.  It covers in-depth - and I mean bottom-of-the-ocean depth - knowledge of:

  1. Professional Conduct and Regulation
  2. General Principles of Financial Planning
  3. Education Planning
  4. Risk Management and Insurance Planning
  5. Investment Planning
  6. Tax Planning
  7. Retirement Savings and Income Planning
  8. Estate Planning

Fun stuff, right?

For the next 18 months, I spent every second of free time studying for the CFP exam which is a 7-hour test of your knowledge and application of your knowledge.   I'd study in conference rooms at lunch.  I'd get home from work and study for 3 hours every night.   I'd spend 8 hours every Saturday and Sunday holed up in coffee shops.

It was brutal.  I had majored in finance at the University of Texas, but college finance programs focus on corporate finance, not personal finance.  It was like learning Spanish by sign language.

After 18 months, I passed all six courses and could have taken the exam.  But I didn't because you also need 6,000 hours of experience.    Even if I had passed the exam, I wouldn't officially be a CFP® professional for at least 5 more years.

Instead, I decided I'd start my practice and reinforce what I learned by actually using it. 

6,000 hours came and went.   I was neck-deep in my own personal hell while I built my business trying to figure out how to pay SF rent on $1800 per month.  Passing the CFP exam was not on the priority list. 

Once I was through the worst of it, I was then laser-focused on going independent and starting The Financial Zen Group. 

And after launching May 2016, it was all-hands-on-deck while I transitioned clients and got my business up and running and dialed in. 

After 12 months, it had come together.  I had done the (nearly) impossible and successfully launched my own financial planning firm. 

But after all those accomplishments, I still didn't have "CFP®" after my name.   I felt incomplete. 

Only things with deadlines get done.  So last May I forced my hand.  I paid the nonrefundable $595 exam fee and scheduled my exam date.   I then paid $1100 for the capstone and review courses. 

I studied 3 hours after work and 8 hours every Saturday and Sunday for 3 months. 

Finally, the day arrived - July 18.   I went to the testing site with my financial calculator in hand, and 7 hours later I emerged victoriously. 

It's taken another 3 months to jump through the administrative hoops, but my certificate arrived last week. 

$5,190.   21 months of intense study.   6,000 hours of experience.   And 12 years in the making.

The loop is closed, and I feel complete.   Not only have I established my own financial planning firm, but I can now proudly say I am the gold standard of financial planners. 

I am a Certified Financial PlannerTM.

-Rick Valenzi, CFP®

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Your First Financial Zen Performance Report

Your very first Financial Zen Performance Report is ready!     

Login to your client portal, and look under "Performance Reports" in your Vault.  

They are designed to be an easy-to-understand and therefore meaningful snapshot of your financial health.  Whether you like a lot of detail or just the headlines, it'll scratch your itch.

Click here for a detailed walkthrough of a sample client's performance report.

If you still have questions after viewing the tutorial, feel free to schedule 30 minutes with me for a one-on-one.

Treat and Trick

Last week marked the 30th anniversary of Black Monday - October 19, 1987 - when the market crashed 23% in a single day . 

In October 1929, The Great Depression kicked-off with a 25% crash over two days. 

In October 2008, The Great Recession officially began with a 13% drop.

If I ran a financial newspaper, website or TV show, I'd run headlines about how scary investing in October is.  

What I wouldn't run a headline about is the average return in October is 0.5%. 

You also wouldn't see any headlines about how November through April usually returns 7.1% while May through October returns 1.4% which means the best month to invest is October. 

I wouldn't run those headlines because those headlines don't sell advertising. 

Scary, ominous headlines do.

Financial media are masters at Treat and Trick.  They treat you with "brain candy" that stirs your emotions, which is really just a trick to sell advertising. 

The takeaway?  Consider the source.

We're Engaged!

My clients and I develop close, personal relationships.   Helping people send their kids to college, buy their first home, and retire is a very intimate endeavor.

Most of my friends become clients, and most of my clients become friends. 

So with that said, I want to share some very exciting and personal news (as friends do).

Last week, Nicole and I got engaged!

She was on a weeklong family vacation in Hawaii.   After getting her father's blessing before they left, I booked a flight arriving on their last night. 

She had no idea I was coming, much less coming with a ring in hand.

With the sky turning pink and the waves lapping the shore, I surprised her on bended knee during her sunset stroll along the beach.  

And after various exclamations of "What is happening!?" and "Oh my God!", she said yes!

Sadly Comical

If you read last week's post you know more than 90% of the American public - not all "financial advisors" are the same. 

Quick recap - there's two types of financial advisors:

  1. Registered Investment Advisors (RIA) like The Financial Zen Group, are legally required to put your interests above their own.  (Colloquially referred to as independent financial advisors.)
     
  2. Registered Representatives of big brokerage/insurance firms like Wells Fargo, Merrill Lynch and Northwestern Mutual don't have the same legal requirement.  They just can't sell you an investment that's not suitable.  (Once upon a time they were called stockbrokers and insurance agents.)

The DoL Fiduciary Rule changed all that…sorta.  As of Friday before last, Registered Reps also have to put your interests above their own. 

That's great news, right?  You probably thought it already worked that way. 

It just makes sense to have all financial advisors everywhere be legally required to put your interests above their own. 

Here's the catch…

…the new, much-talked-about, hotly-debated DoL Fiduciary Rule only applies to retirement accounts!  

So Mr. Big Brokerage Financial Advisor can still sell you the inferior investment that pays him highest commission…just not in your IRA. 

It's sadly comical if you ask me.   But when you mix Wall St. lobbyists with a greedy congress, this is the type of "reform" you end up with. (Although it's at least a step in the right direction.)

You can only do 2 things:

  1. Write you representative
  2. Educate yourself to understand the reality you're dealing with

Hopefully this helped with the latter.

Sound Smarter Than All Your Friends

You'll want to read this for two reasons: 1) it directly impacts you and 2) understanding it will make you sound smarter than all your friends. 

You've probably heard about the new Department of Labor Fiduciary Rule.  You also probably have no idea what it is, what it does, or why you should care. 

It partially went into effect last Friday, so now it matters.  Over the next two weeks, I'll give you you two bite-size explanations.

First, there are two types of financial advisors:

  1. Independent (like The Financial Zen Group)
  2. Big brokerage/insurance (like Wells Fargo, Merrill Lynch, Northwestern Mutual)

The difference is not just aesthetic.  Each one is regulated by a different government organization (SEC vs. FINRA). 

As a result, they also follow two different sets of legal standards:

  1. Independent - fiduciary standard
  2. Big brokerage/insurance - suitability standard

A fiduciary is someone with a legal requirement to put your interests above their own. 

So the fiduciary standard is easy to understand.  It means I am legally required to make recommendations in your best interest without regard to my own. 

The suitability standard isn't that complicated either.  It means a financial advisor is required to sell you a SUITABLE investment.  

In other words, the financial advisor can't sell grandma glasses she doesn't need.  But if she needs them, he CAN sell her the glasses that pay him the biggest commission even if he knows they're not the best. 

A fiduciary legally can't do that. 

That's the set up.  Next week we'll get into how that all changed (partially) last Friday. 

80 Years Old Lying in a Ditch

When was the last time you looked under the hood of your car?

If you haven't recently, you should.  It will give you a tremendous appreciation for the triumphs of human engineering. 

The most amazing part about your car is that something so complicated can be used without knowing how it actually works.   Just hit the accelerator and off you go. 

And even though you don't know how it works, you can tell when something is wrong.  The "check engine" light goes on.  Or you hear a weird clunking noise.  Or there's a puddle of oil on your garage floor. 

And when something is wrong you don’t' try to fix it yourself.   You know you don't know.   Just look under the hood. 

So you take it to a mechanic.

I'm jealous of mechanics.  I am so, so jealous of mechanics.

My job would be much easier if financial planning was more like your car.  

1. You can't look under the hood.  When you look under the hood of your car, you know you don't know.  But the hood of your financial automobile is welded shut. 

The only way to open it and see how complicated it is is to actually be a financial planning professional.  Unless you’re a financial planner, it's difficult (impossible?) to appreciate how complicated and nuanced your financial automobile actually is. 

And the penalty for people who don’t know they don't know is a life of paying too much in taxes, throwing money away on bad investments and never knowing if something is truly, worryingly wrong….until it's too late…

…which is the most critical difference between your car and your finances.

2. There are no warning signs.   There is no check engine light.  There is no clunk.  There is no puddle of oil.  For most people, you only know something is wrong when the wheels fall off, the engine explodes and you're lying in a ditch. 

That's only partial hyperbole.  The end result of a lifetime of uneducated and misguided financial decisions is running out of money at 80.  Imagine celebrating your 80th birthday with only your Social Security benefits to live off of.  Social Security benefits are just slightly above the poverty line.

If you're a new college graduate, you probably don't need a financial planner.  If you're 80 and living solely off of Social Security, you also probably don't need a financial planner.  At those stages, you're not driving a car.  You're riding a bike.  You can fix a bike yourself.

But once you get your driver's license then at least talk to a financial planner to find out if you need one.  Maybe you're the 1 out of 100 that doesn't.  If you're like the other 99%, you'll probably benefit from working with a professional.  And you won't know what you don't know until you meet with one. 

It's a no-brainer.  A good financial planner won't charge you anything for an introductory meeting to figure out if you'd benefit from working together.  There is nothing to lose but the half hour you spend with him/her. 

So I encourage you to schedule an appointment with a financial planner today.  It goes without saying, I'd be happy to sit down with you.   But if I'm not your cup of tea, there are plenty of other independent, fee-based financial planners out there.   (Though I encourage you to stay away from "Financial Advisors" who work at a brokerage or insurance company.)

For me, just schedule a 30 minute introductory meeting from my website. 

For someone else, interview a planner from any of these independent, fee-based financial planner networks. 

National Association of Personal Financial Advisors

Financial Planning Association

Garrett Planning Network - Financial planning paid by the hour

Rationalizing Like a Guilty Child

Mike's a good guy.  He likes helping people.  He's been a financial advisor for over 25 years.  Mike's also an old coworker from Wells Fargo.  (BTW, Mike is not his real name.)

Mike agreed to help me with my clients' old annuities since I no longer can.  (Being a fiduciary, fee-only financial planner means I can't directly help clients with commissionable investment products like annuities.) 

What's in it for Mike is the annuity company will pay him commission each year to service the annuity.  That's a fair trade-off.  It doesn’t cost my client anything, and we get help with paperwork.

One of my clients with an annuity is retiring.  So it's time to turn on the faucet and start collecting his monthly annuity checks.  I called Mike to complete the paperwork.

Mike pushed back.  Not because he didn't want to do the paperwork, but because he didn't think we should start the withdrawals.  He wanted to let it keep growing.

I was baffled. 

The reason you purchase an annuity is because the insurance company promises to pay you even if there's no money left.   You "win" when the account value goes to zero because you'll still get paid.    Then you're getting more out than you put in. 

You always start the paychecks when you retire.

I said, "Mike, we don't care about the account value growing.  We care about getting as many paychecks as we can.  After all, even if the account value goes to zero….."

I stopped.  The light bulb was blinding.

Strange things happen in the murky waters of non-fiduciary, commissioned brokerland.  It turns otherwise good people greedy and self-serving. 

I continued "….if the account value goes to zero… you don't get paid."

Mike reacted like a guilty child caught rationalizing an excuse to do something he knew he shouldn't be doing.

"Well…uhhh….sure…if the account value goes to zero I don't get any commission….but uhhh….it's really important to grow the account."

Sure it is Mike.  Sure it is.

Conflicts of interest are rampant in brokerland.   If your "financial advisor" works at a brokerage firm or an insurance company tread carefully.   There's a high risk that they are guilty children rationalizing why the product that pays them the most is in your best interest.   

One Year Anniversary!

One year ago this week, The Financial Zen Group opened for business

Every morning I pinch myself because I can't believe it's real.  I am living my dream.   Opening my own RIA became my destiny in the Summer of 2005. 

3 years prior, I had disgruntingly left my 90 hour/week investment banking job.   I had had enough abuse.  I was done with finance. 

So I got a sales gig at Yahoo and I crushed it - President's Clubs and sales records and nice, fat commission checks.  Within 6 months they promoted me to manage a sales team. 

I successfully ran a team of 11 sales reps for the next 2.5 years.  I loved my sales reps. I loved helping them grow and develop and reach their goals, both personally and professionally.  I truly, deeply cared for them.

That's when I learned that I love helping people. 

But something was wrong.

I loved helping my team, but I hated corporate politics (probably because I sucked at it).   I could never come to terms with the insincerity of it.  And unfortunately you have to be good at corporate politics to reach the upper echelon in any organization.

That's when I learned I needed to work for myself.

And finally, I missed finance.  I really, really, REALLY missed finance.  I LOVE finance. In retrospect, I wasn't done with finance when I left investment banking.  I was just done with that job. 

That's when I learned I had to "do" finance. 

Isn't it amazing how the most obvious decisions in hindsight aren't so obvious when you're living through them? 

Clearly I was destined to start my own financial planning firm.  But I couldn't see it yet. 

So I started soul searching the Summer of 2005.  After months and months…and months… the light bulb finally went off.  

Financial Planners help people.  Check.
Financial Planners work for themselves.  Check.
Financial Planners do finance (duh).  Check. 

And the rest is history.  Well, actually the rest was 11 years of hell - penniless, sleepless nights of self-doubt, well-intentioned encouragement from friends and family to give up and not-so-well-intentioned encouragement from managers to forsake my principles for my job. 

But all that is another tale for another time.

This week marks much more than my one-year business anniversary.  It marks the one-year anniversary of living my dream. 

And without all of you - my clients - who I care for even more deeply than my sales reps -  I wouldn't be pinching myself every morning.  So thank you, thank you, thank you for letting me help you and making me a part of your lives.

I can't wait to see where the next 12 years takes us!

Giving Thanks

You know the cheeseball at Thanksgiving dinner who initiates the "What's everyone thankful for?" round table?   Well in my family that cheeseball is me. 

Since I won't be enjoying Thanksgiving dinner with you, you won't get to hear how grateful I am to have you as a client.   So I thought I'd write about it instead.  

I love what I do. I love helping people navigate the murky waters of personal finance.  I love seeing the difference I'm able to make in people's lives.  I'd do it for free if I didn't have rent to pay. 

And the best part is not only do I get to help people, but I get to help people I really, truly, deeply care about.  People like you.   

So what I'm grateful for this Thanksgiving is you.   Thanks for being a wonderful, appreciative, patient client.   Thanks for trusting me with your finances.  Thanks for all your time and energy in helping me help you. 

And when your ears burn tomorrow, you'll know it must be my turn to say what I'm thankful for. 

Happy Thanksgiving!

Shame, Shame, Shame Wells Fargo!

Want an inside look at what happens behind closed doors at big Wall St. firms?  Then read on!

Over my years at Wells Fargo, I saw a lot of things happen "behind the curtain." Things that the general public doesn’t know about, but probably should.  One of those things has been exposed over the last two weeks.  In case you missed it…

The lender [Wells Fargo] opened more than 2 million accounts that consumers may not have known about, the Consumer Financial Protection Bureau said in a statement Thursday. Wells Fargo, which fired 5,300 employees over the improper sales practices, agreed to pay a record $100 million fine.   (Source: Bloomberg.com Full Article)
Wells Fargo has strict quotas regulating the number of daily "solutions" that its bankers must reach; these "solutions" include the opening of all new banking and credit card accounts. Managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas. Managers often tell employees to do whatever it takes to reach their quotas. Employees who do not reach their quotas are often…threatened with termination. (Source: Bloomberg.com Full Article)

This shouldn't be a surprise.  There's rotten apples in every sales department.   What's surprising is that your "Personal Banker" is a salesperson!!!  

"Retail Financial Services" includes anything that touches Joe & Jane Public - banking, mortgages, investments, insurance, etc.   It's like any other industry.  It exists to make money.  Which is totally fine.  There's nothing wrong with that.  Businesses earning profits is what keeps our economy ticking along.

What's wrong with the retail financial services industry is that it slings its wares to unsuspecting customers under the guise of "professional advice."  These firms do everything they can to cover up the fact that the people selling their products are actually salespeople. 

That's why your "Personal Banker" is NOT called your "Bank Product Account Executive."  That's why your "Financial Consultant" is NOT called your "Insurance Sales Agent."   And that's why your "Financial Advisor" is not called your "Investment Product Sales Rep." 

And yet all of these people at large, Wall St. firms are SALESPEOPLE.   There's an inherent conflict of interest in this.   You can't be a "Professional Advisor" and a Salesperson at the same time.  For example, is your financial advisor recommending an investment because it's right for you or because it will help him or her meet a sales quota or bonus incentive?

The sales culture at large financial services firms is unavoidable.  It's who they are.  It's engrained in everything they do. Let me further illustrate the point with a personal example. 

In my second year at Wells Fargo, I was put on a "Performance Improvement Plan."  I was given 3 months to improve my "numbers" or be terminated.  

My "numbers" were not what you might think.   It was not how many clients I had developed financial plans for.  Or how much money I had saved my clients in taxes.  Or how many clients' portfolios I had fixed.  My "number" was how much revenue I had generated for Wells Fargo in the last 12 months.  

That is how "Financial Advisors" at large brokerage firms are measured - by how much product they sell (Merrill Lynch, Morgan Stanley, Wells Fargo Advisors, Ameriprise, etc.)  Management is not focused on the clients.  They are focused on the fees clients generate.  

It gets worse.  Management sternly suggested I sell my clients high-commissioned investment products to get my numbers up.

Think about that for a second.   Personal finance is super complicated which is why clients put their trust in a Financial Advisor.  Clients come to me and say "I don't know what I'm doing.  Please help me."  I take that responsibility very, very seriously.  Honoring that trust is what gets me out of bed at 5:15am every morning.

And here is management telling me to take advantage of my clients' trust to produce more fees!    Yech!  Blech!  That's disgusting.   Just thinking about it makes me vomit in my mouth a little.

And in case you think this guy was just a bad apple, he's not.   He was actually a great sales manager.  But he was a sales manager.   The same sales carrot and sales stick he used on me was used on him by his regional manager and the regional VP above him and on and on and on.    And it's not just Wells Fargo either.  These conversations happen in every branch office of every big brokerage firm in the country.  That's just how the brokerage industry works. 

So I quietly refused.  I just nodded my head and kept doing what was right for my clients (which did NOT include selling them something they didn't need even if my job depended on it).

I don't know about you, but I have found many times in my life that when you don't sell out…when you stick to your guns…when do the right thing even though it's hard…the universe rewards you in random and unexpected ways. 

Over the next 3 months, I nearly doubled my client base.   The stars aligned and more new clients came aboard in those 3 months than had in all of my first 2 years.   I was taken off the Performance Improvement Plan and even had people from headquarters call me to find out how I had done it. 

I’m living proof that it is possible to work in a sales environment like Wells Fargo and still hold yourself accountable as a fiduciary Financial Professional, not an Investment Product Sales Rep.  But people like me are rare.  Trust me, it ain't easy sticking to your guns and doing only what's right for your clients when you have a sales quota hanging over your head. 

Independent, fee-based financial planners, on the other hand, don't live in that sales world.  We do not work for the Wall St. machine.  We are not sales people.  We are professionals like doctors, lawyers and CPAs.   We put our clients' interests above our own.  We don't have upper management pressuring us to open accounts.  We don't get bonus incentives to sell their latest product.   We have Certified Financial Planner certificates hanging on our walls, not sales awards.   And when you work with us you can feel safe knowing that we give our recommendations - not because they'll benefit us or our firm - but because they are what's right for you and your family.