Podcast Episode 5 – Investment Advice is NOT Financial Planning!

One of my pet peeves is how the financial planning industry had allowed itself to be consumed by the investment advisory industry. The two are not the same!

Financial planning is truly ALL encompassing, taxes, insurance, investments, college, debt, estate etc. are all part of the discussion.

What’s investment advice though? Well, simple, INVESTMENTS!

Investments are part of financial planning but financial planning is so much more.

Yet, because most financial ‘advisors’ get paid on the investments they manage, it’s easy to see how the two get mixed up.

I wish this weren’t the case. I wish we truly had an industry where clients value what a financial advisor does, in terms of seeing the big picture as opposed to just managing investments.

But that industry is starting to spring up. Groups like XY Planning Network (which I’m a part of), Garret Planning Network, NAPFA are doing wonderful things to advance of the cause of true financial planning.

The problem, of course, is that many people have been trained to view financial planning as investment advice and thus feel they don’t need to seek ANY financial counsel. After all, they can just go to Vanguard or something.

Yes, but does Vanguard or the other firms, actually do Financial Planning??? Do they look at your 1040, your estate documents, your insurance illustrations, your FAFSA, your debt etc…?

This is not a slight on Vanguard by any stretch, as they offer a wonderful service for what they do… INVESTMENT ADVICE.

But most people need more than that, and yet they don’t know it.

So, they have no Durable Power of Attorney. Or they have what they think is an irrevocable trust when in fact, the front page of the trust states explicitly THIS TRUST CAN BE REVOKED BY THE GRANTOR. Or they just default to take Social Security at 62 without even the slightest understanding. Or they’ve been divorced and don’t understand they can get MORE on their benefits by filing for Spousal benefits. Or they don’t see the HUGE opportunity to pay a bit more tax now in order to pay so much more less in the future. Or they don’t know that by doing X this year will affect their financial aid 2 years from now… etc. etc. etc.

The list goes on and on and on.

Hardly any of these discussions revolve around Investment A vs. Investment B and yet it is so much more important because if you overlook these things your whole plan could sink.

Don’t do that. Get a financial advisor to look over your situation. Yes, it will cost you something. Guess what? It’s worth it.

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