December 3, 2016

Robert Gignac: The Clock Is Ticking

I was having dinner in a Chinese restaurant this week and when I cracked open my fortune cookie after the meal it read – “Have you prepared for your worry free retirement with more money than you’ll need?” Ok, it didn’t actually say that, it said something more along the lines of – “May you live in interesting times!” 

When it comes to personal finance there is no doubt that we are living in interesting times. Markets have dug out from the mortgage subprime and global credit crisis. Now the experts are talking about the possibility of a double (or triple…) dip recession, whispered words about potential depression, and you cannot possibly pick up a daily newspaper without the headlines screaming the words “Stocks Crash”, “Markets Plummet”, “Financial Free Fall” or “Economic Armageddon”. Just to add some fun into the mix – markets are hitting new highs seemingly every third day. 

Turbulent Times 

These are currently turbulent economic times and a difficult period of time to be an investor, but it’s also a time that should make us re-examine our personal financial plans. The problem for many of us is that we spend so much time focused on our personal lives, kids, spouses and work that we sometimes overlook our own finances. 

Are your personal investments worth more or less today than they were in January 2008? During the financial meltdown did your investments fall by 20%, 35%, perhaps 50%? Given that we all felt some degree of pain as we opened our year-end investment statements, the biggest question we face is best phrased in Latin – “Quo Vadis”. The phrase means “Where are you going?” and it is a good question to ask in times of turmoil. 

Are you aware that current estimates are that less than 40% of all Boomers (which encompasses a great many readers of this article…) currently use a financial advisor? I find that fact interesting as many of these same boomers might have a personal trainer at the gym, use a coach to help them with their swing on the golf course, or see the value in providing tutors for their high school or university age children. What stops people from seeking guidance with their financial future? 

Emotions Rule 

Money is still a very emotional issue for many people – even in 2013. Why? It’s just pieces of paper with ink on it – what’s so emotional about that? My work in speaking with financial advisors across North America as well as clients of the financial services industry confirms this. At a personal level we all feel that we should be doing better, we compare ourselves to others which is self-defeating (and always leaves us feeling as though we are lacking somehow), and many of us feel inadequate about our financial knowledge. In many cases we feel a bit embarrassed, that given our expertise in other areas of our lives that our personal finances might be in disarray. 

We need to understand that our personal financial future includes much more than just money in terms of bank accounts or mutual funds. Our use of credit, insurance, wills, personal financial plans, retirement accounts, powers of attorney for both personal care and finance, all of these pieces are part of having a comprehensive financial plan for our future for ourselves at a personal level and for our families at a larger level. 

Cost Concerns

Given the potential complexity involved in combining all of these different aspects of personal finance, how is it that close to 60% of Baby Boomers don’t see the need to consult a financial advisor? Often when Boomers are surveyed about their ambivalence to using financial professionals it comes down to cost.

Financial professionals can earn compensation from fees billed to you or from commissions from products sold to you. Some feel there is an advantage to ‘fee only’ because there is no pressure to sell you anything. Fees can range from an hourly rate for work done, a flat fee to create an individual financial plan, or a fee based on the percentage of assets managed. Fee-only planners may not have any direct motivation (i.e.: commissions) to help you implement the plan. Having a plan and not implementing it is equivalent to having no plan at all. Only focusing on cost or commissions, rather than value may lead you to short-change yourself. A more important measure should be how your plan functions and whether or not you are achieving the benefits/results you set out to achieve.

Hiring a financial advisor can be a scary thought for many people. In order to build a complete and comprehensive plan, an advisor has to become familiar with your entire financial situation. You have to be comfortable and willing to share personal information with them. They have to understand your dreams and goals. Discussing that much personal information with a ‘stranger’ can be scary. Don’t be intimidated. Financial professionals aren’t there to pass judgment, and they can help you attain the goals you want for yourself and your family. Keep in mind they don’t do it for you. You are responsible for your part in the planning process; nobody will care more about your money than you will.

Are we living in “interesting times”? Absolutely. But these tough times won’t last forever and your financial future awaits – the clock is ticking.

Robert Gignac is the owner of Taynac & Associates – he delivers keynote presentations, seminars and workshops on personal financial development and motivation.  He is the co-author of the International best-seller “Rich is a State of Mind” now in its 13th printing. Sample chapter and reviews at: www.richisastateofmind.com . To book Robert to speak at your next corporate or client event, please contact him at: robert@richisastateofmind.com.

  • Kevin Cahill

    Great article Robert, most of our advocates range in age from 55 to their early 80s. For this group of people, a key concern is to keep from running out of money, as they grow older. People are living longer, thanks to advances in medical science, and may live longer still, once genetic engineering becomes a proven technology. – See more at: http://canadianlegacybuilder.ca/annuities_are_the_answer