Financial Advice for Normal Folks

Thursday, October 31, 2013 at 2pm
By John Friedman

Everyone should have access to financial advice, right? I think we can all agree on that — or at least we can agree that it would be a good thing if we all had some way to obtain financial advice.

But the world in which we live does not offer that up. Instead, financial advice is just about always bundled in with investing or insurance, and that means that, unless you need investing or insurance sorts of financial services, well then, no financial advice for you!

*  *  *

Something along these lines happened recently:

Client: Hey John, ya know, you’re too far away for us to see you in person with any regularity, so we looked for someone like you closer by to where we live — someone to help us think through how well we’re situated for retirement — but since we have most of our money in real estate, everyone we talked to said we didn’t have enough money in investments for them to work with us. So even though we have lots of money — and money is money, right? — what we found was that, unless we also have some hundreds of thousands of dollars invested in stocks and bonds, or, better yet, some millions of dollars invested in stocks and bonds, none of the people we approached wanted to touch us with a ten-foot pole.

Me: It’s a shame, isn’t it? The Financial Services Industrial Complex (the FSIC) has never found even one way to make too much money by helping people be smart in their overall financial life, while it most assuredly has found, many, many different ways — with more coming online all the time — to make too much money by doing business with customers who are not smart in their overall financial life. So maybe the FSIC has an interest in seeing its customers not smarten up?

Client: Yea, whatever [thinking to themselves: that John, he always does want to go big on everything, doesn’t he?] . . . but what we really noticed is that they didn’t want to talk to us about our real estate portfolio, at all. We have lots of properties and even more mortgages, and we could use some help being smart about them, but all they wanted to talk to us about was how we’d be so much better off in stock investments and, oh yea, a few of them also said that we could use some complicated life insurance too.

Me: Yea, insurance and investments are the main bones on which all the FSIC doggies chew, so, even if they wanted to, most of those investing guys and gals would not have the chops to help you think through the wisdom of your real estate portfolio — what to hold and what to fold, how to beautify that mortgage portfolio of yours, etc. — because they’re stocks ‘n bonds people and insurance people, and they are typically not general-financial-smarts people. And even if they did have the chops, why, even then they’d probably have a lawyer telling them that they cannot help you out — that any numeric analyses they wanted to do for you they’d have to first put through a get-it-lawyered-up cycle, and that the lawyers would really rather that they just-not-go-there in the first place. So you probably aren’t missing much by not having them want to help you.

Client: Yea. They kept bringing the conversation back to the stock market, and what they could do for us there if we cashed in some of our real estate chips.

Me: Now if you did as they really wished, and went out and sold, all at once and willie-nillie, all your real estate assets and put the after-tax proceeds of those sales into stocks and bonds, you better believe that all those people you talked to would be mighty happy to be of service to you! As in: Ka-ching, and as in, What’s 1% of that after-tax proceeds number? But their happiness isn’t part of your formula for an ongoing successful retirement, is it?

Client: Yea, no, making them happy is irrelevant to us. Don’t get us wrong: we’re business people, so we’re always happy to pay people well when they’re providing us with a great service, but this ain’t that. All of which is to say that we’re happy to have someone like you in our lives who helps us think things through, and who does so without always trying to sell us something and without making us agree to pay you 1% of our investments forever and ever, regardless of how much help you provide.

Me: Thanks. There are some handfuls of people in addition to me who do financial advice like I do, but all of us together don’t amount to a nit on a gnat on an anteater. And that’s a cotton pickin’ shame, too, because it’d be great if the idea of everyone having an annual financial health checkup became as commonplace as the idea of everyone having an annual medical health checkup, or if the idea of six-month financial check-ins become as commonplace as the idea of going to the dentist twice a year to have your teeth cleaned. And, business-wise and at least partially selfishly, I’d love to have more competition . . .  what with that notion from MBA-school that the spectacular growth of Starbucks in its early years helped coffee shops everywhere do better . . .

So, yup, I’m most definitely workin’ on it . . .

*  *  *

After some time off for family matters, and some much-needed recuperation from same, I’m back, baby, I’m back, and I’m feeling renewed vigor in my push to further develop a business model (or two or three) that profitably serves up financial advice for Normal Folks (NFs) so that, one day, FAFNF is as common an acronym as AUM is today.

Stay tuned . . .

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