Lifting the Fog
Do you want to know a secret? I never liked thinking about money. In fact, I still don't. Strange thing for a Wealth Coach to say, I know.
Have you ever seen the movie adaptation of Stephen King's The Shawshank Redemption? The classic tale of Andy Dufresne being falsely accused of killing his wife and his attempt to navigate the prison system and his acquittal. In the end, the justice system fails him, and he must take matters into his own hands. He spends more than a decade digging his way out of the prison and through the sewage system to freedom. His tool for freedom? A rock hammer.
My tool for freedom? Financial knowledge. I've previously written about my relationship with my career. My revenue stream was forever linked to a career that no longer provided me with personal growth. The prison walls began to form around me. It became very apparent that for me to reignite my career, I was going to have to prioritize the thing that held the keys to why I was there in the first place. Money.
I began that journey in the same place that many others start. In a financial advisor's office. It's nice to think that we can take our money (represented by the circle) and drop it in a financial advisor's box. Our expectation is that they will maximize our money and deliver us a fully filled circle. What I soon discovered is that there are 3 fundamental problems with this assumption.
Quality
The first thing that I quickly discovered was that being ignorant about investing made it incredibly difficult to know if I was putting my money in a quality box. As I talked to advisors, they each had different tips and tricks that sounded good. But whose advice was best? Without the supplemental knowledge, it largely came down to a popularity contest and who I liked best. As I worked with the advisor, it became very clear to me that the only way that I was going to get comfortable with the quality of the advice was to gain the knowledge myself. I needed the conversation to be a two-way street. This isn’t car maintenance, where I might shell out a couple hundred extra dollars because of ignorance. This is my future!
Pace
This goes back to why I wanted to have a strong investing strategy in the first place. I wanted to break free from the corporate work. Unfortunately, the "retirement plans" that I was being provided required me to continue saving for another couple decades in a career that was no longer fulfilling. The advisor didn't deep dive with me on entrepreneurship or real estate, two other great wealth creators that can be accomplished at a quicker pace than investing in retirement accounts exclusively. There's a reason for this, and its...
Cost
My advisor's fee structure used the AUM (Assets Under Management) model. The standard compensation structure for the financial services industry is incredibly flawed. By tying the fee structure to your money compounding, they are enacting a heavy, heavy toll on your retirement accounts. And these costs never go away if you remain under AUM. This alone is reason enough to become financially literate. There are very good reasons to have someone to talk to when there is high volatility in the market. It's incredibly easy to get swept up in the emotion and do something against your best interest. There are better ways to do that than subject yourself to the AUM model.
The Rub
Ask yourself this. When you see the below graphic, do you focus on the first column (today) or the last (after transformation)? The first looks unappealing. You're going to take time and money now to prove to yourself how little you know about building wealth. Not great.
But consider...
You want to exit a career and start something new. This will require time and energy. Change doesn't happen without it. Laying a strong foundation of financial knowledge is a great way to build these habits into your daily routine. Educating yourself in wealth building will make your transition faster and increase your chances of success. You will have already allotted the time to act on that new career move when you're in a financial position to make it happen.
The second rub is that you are lifting the fog and discovering just how much you don't know. No one likes to do that. But, frankly, how appealing is it to simply hand your money off to someone else and hope that they are maximizing your return? It needs to be a two-way dialogue where you have control and can ask the right questions when necessary. You don't need to know it all, but you sure better know if you're getting raw advice!
The final stumbling block is that you see the costs of a financial education up-front. Rather than having money deducted from your retirement accounts, you are being asked to shell out cold-hard cash on the front end. The difference? A financial education is a non-recurring expense. You don't pay for it yearly. The AUM model will reduce your wealth compounding on a yearly basis. The cost isn't as visible, but it's taking a heavy toll.
The Appeal
Now let's look at the last box.
That time you are putting in now to learn how to build wealth? You can use that knowledge to completely transform your money situation, so that the 9-5 is a thing of the past. You can start that dream business and make your time more valuable and fulfilling.
Another advantage is that you are no longer handing your money over to the mystery box. You are the box. If you continue to seek investment advice, you are knowledgeable and it's a two-way conversation that is built on what will work best for you, not some cookie-cutter approach that is less effective.
And finally, you seek transparency in the fee structure. You understand that offering up a portion of your compounding stack is unappealing and seek a more favorable model. Your future self thanks you because you've eliminated an incredibly costly drag on your retirement savings. Remember, you are in control.
What's it going to be? Are you ready to pick up the rock hammer and start chiseling? It won't happen on its own. And the most appealing part? The more you know about wealth building, the less you have to think about money. So don't let that be your excuse. Freedom is getting to do what you want when you want. If you don't enjoy your work, then you are thinking about money 40+ hours per week. Harsh, I know, but it's the truth. How much longer do you want this to be the case? Take a season in your life to get this right, so that you can vastly improve the quality of your future time. Who's ready?