3 Reasons For A Simple Financial Plan

This message isn’t for everyone, and that’s okay. But if you like simplicity, keep reading.

The Industry Shifts the Focus to the Unimportant

All too often our industry prides itself on fancy charts, complex numbers, sophisticated investment strategies, and volumes upon volumes of paperwork. I’m not belittling those things – in all honesty I do think there’s merit in it. A simple financial plan takes a good amount of work, analysis, and several calculations.

But given the choice, would you rather have an encyclopedia (remember those?) worth of documents put in front you, or something a bit more concise? How much of that “inside baseball” do you really want to be privy to?

What is important?

You don’t make car buying decisions based on how well calibrated the production line machines are. You buy the end result in the showroom. You buy the end product that was designed after months of research and due diligence.

The end result in working with an advisor should be a simple financial plan – easy to understand and easy to read.

Sure, you definitely need to be aware of certain things in your financial plan. There needs to be some level of performance and diversification is paramount. But it occurred to me that in providing all this excess we do more harm than good.

Rather than simplify, we complicate – and that’s the crux. Clients pay their advisors to help make things simple. If you’re that type of client, and you currently don’t understand what your advisor puts in front of you, demand clarity.

What should you focus on?

Before you get hit in the head with another sharpe ratio or alpha, ask them to boil it down. Rinse and repeat until it’s as clear as day. It’s your financial life in their hands, and it is their responsibility.

With clarity comes comfort, and that leads to peace of mind so you can go about doing the things you really enjoy doing (which should also be clear to both you and your advisor). You owe it to yourself. After all, you were confused before, and that was free.