Outcomes or Behaviour?

Control is a funny thing.

You want to sell your house? You can put it on the market, but you can't make anyone buy it. You want to get to work on time? You can leave early, but you can't control traffic.

What makes you think you can 'be financially independent' just because?

You can't wish yourself to making, building or protecting your intended lifestyle. There is no magic formula.  You can't control the outcome.

(See, I can't even control if someone takes down their video)

There are however, SOME things you can control. Behaviours.

You can't control interest rates, but making home loans payments is something you can manage. Investment market returns are volatile, but you can control how much you invest, and the structure you choose to utilise. You can't really control your health (although there are things that you can do to give yourself the best chance), but you can protect yourself from unforeseen events.

So here is an example of the difference:

Outcome Focus

• I am going to retire comfortably
• I'd like to go on a holiday next year.
• She'll be right

Behaviour Focus:

• I am going to invest $x into super and pay an extra $x off my home loan.
• I am going to put aside funds for a holiday
• I am going to protect myself from unexpected sickness /accident.

So to summarise, behaviours are things you do consistently. They are manageable, and things that you can control. They are things you can do now, and not have to wait for in the distant future.

There is no doubt that these behaviours have an outcome. but that isn't the focus. The 'outcome' is nothing more than a direction. and the behaviours are the little steps, taken often to get you and keep you on the right path.

Thanks Master Oogway.


Comment or connect. We'd love to hear your feedback.

 

Why, why, why, why, why?

Do you have values?

Great!! Have you ever stopped to think about them and why you have them?

Values come from who we think we are.We find out values when we ask questions of ourself like:

• Whats important?
• What's right?; and
• What should I do?

Values aren't things. We can't hold them or spend them, but if you think of yourself in a certain way, how did you feel the last time you acted in a way contrary to those 'values'. The worse you felt, probably correlates to how strongly you hold those values.

So how often do your actions match your values?

The '5 whys' system was initially used by Toyota. It is very simple, and can be very effective. Next time you want to do something, ask yourself why?

Why do I want to do this?

Here is an example from when I founded Viridian.

Why do I want to do this?
I think there is a better way of doing financial planning.

Why?
People deserve to be given advice that has their interests at the centre.

Why?
While planning your finances isn't 'life and death', wrong decsions can have a huge negative impact.

Why is that important?
A few small decisions, like paying off a home loan faster, saving for a rainy day or life insurance could have had a large positive impact on my parents.

Why does this matter regarding setting up a business?
I want people to not make the same mistakes.

So for me, that's why. Everytime I hear that someone has cancer, or has had a heart attack, I feel a littel stab. When people talk about the 'conventional wisdom' of making money that, unfortunately doesn't make sense, my stomach tightens, just a bit. So this is why I founded a financial planning business.

Why not give this a try with something you are doing, (or just as good, if something has gone wrong), but rmember: the only important thing is honesty.

We want to learn more about you. More important we think YOU should know more about you.

The value of advice over product

In financial planning, I find that there are things that people want to talk about, and things that they really need to talk about. 

Over the last few weeks, I have met a few new business owners, and we have spoken extensively about the importance of 'telling it like it is', even when sometimes that isn't what our potential clients want to hear.

Without using names for obvious privacy reasons, I have one recent example that springs to mind.

When I first met Daryl and Maggie (not their real names), they had been referred to me by another professional. We sat down and spoke, and they told me about all the exciting things they wanted to do financially. They had some ideas, and an interesting take on their positions. They also made it clear that they had a bad experience with a financial planner in the past, and that they did not wish to talk about insurance.

When I first started in this industry *profession*, I worked for a practice that specialised in planning, self managed super and insurance broking. I was grateful for the opportunity to get a start in the industry, but after some coaxing from the Managing Director, I told him that I wasn't interested in being a 'foot in the door' life insurance salesman. And more than ever, I still don't.

However, there can be no doubt, that your income is the engine that drives ALL of your other activities.  Without this, you can't repay your debt, contribute to super, or invest in property. You don't go on holidays or buy your kids their first car.

To repeat (and it sounds blatantly obvious), but without ongoing income, you don't get to do all of the fun stuff.

So I told Daryl and Maggie that I was down with the fun stuff, but without putting in place a strategy to protect 100 percent of their income, the fun stuff they wanted to do was built on a weak foundation.

It took quite a few meetings, and 3 months to convince them to agree, and then another 3 months to get their cover approved due to the health difficulties that they both had. Finally, it took a few more weeks to convince them to accept the increases in premiums, and the exclusions, and to re arrange how some of the premiums were to be paid, after the insurer finally agreed on what they would cover.

So it was with a sense of sadness, but also relief, when I received a call from Maggie less than 6 months later when she rang to inform me that Daryl had been diagnosed with lymphoma and that she felt she would have to sell their house. She felt this way because even though she remembered that he had income protection, Daryl was so sick, that she had to take time off work and she didn't think her policy (or his) covered that. I explained that we had arranged for sufficient cover to ensure that there was a lump sum available in the event of certain sickness, and that lymphoma was one of these. Daryl would receive a lump sum, and she could use this to fund her break from work, and income protection would cover Daryl's enforced lay off. They wouldn't have to sell their house.

I was grateful that the insurance provider was thorough but swift in their assessment, and paid the claim quickly (and even went beyond what they probably needed to do).

Money, of course, can not in itself help people to recover from sickness or accident, but financial security can mean that when the unforeseen strikes, money is one less (and large) thing NOT to have to worry about.

Does it cost money? You bet. Are there intrusive questions and maybe blood tests? Unfortunately.
Would you regret not having cover after a heart attack, stroke or cancer (and you would be horrified at the probability of having one of these three illnesses)? Probably.

In finishing, I want to reiterate that financial planning, when done properly, helps people to achieve financial goals,  with primary goals being to create and grow your wealth. But anyone who remembers Maslows needs hierarchy would remember that after food, water, sex and a few other things on the bottom rung of the ladder, security was an early need that required being met. Being able to sleep at night, knowing that you are protected from sickness and accident, is a real level of security.

A lot of people think that sickness is something that happens to older people, or that covering this is too expensive. Daryl was 41 when he was diagnosed with terminal lymphoma, and not obtaining cover would have been the most costly mistake possible.

As ever, I'd love some feedback. Feel free to comment, or share this with people you know.

Find a way or make one

I have been a financial planner now for about 14 years. I have been a business owner and manager for about 6 1/2 years.

I doubt that I ever thought that I would own a business when I started in planning. It really came to a head about 7 years ago, and for a number of reasons.

I was unhappy with the direction that the company I worked for was taking. I felt uncomfortable, to say the least, with the sales at all costs ethic, and what I guess I would consider a product first approach. I felt, and still do, that client needs come (waaay) before the 'product'.

Secondly, I was concerned about the compliance record. I personally did OK, but the practice had...issues. Compliance can be onerous at times, but it is in general for consumer protection, and important.

Finally, I had started to look into ethical and responsible investment. More to the point, it had started to make real sense personally, and from a business sense. Even more to the point, I was beginning to feel uncomfortable about the 'disconnect' between how I felt personally on issues, and what I was doing 'at work'. With regard to that, I don't feel that there is ANYTHING unethical or irresponsible with financial planning or investing per se (fancy, huh). But there can be unethical practices that underline this. Moreso, it is a problem if you (the invetor), aren't aware of the practices, and they are something that in general you wouldn't feel comfortable with (or worse, would actively avoid).

(Oh, OK, so you are aren't an investor? Just about any person under the age of 50 who has had a job has super. And it just might curl your lashes to see where they invest YOUR money).

It came to a head when I mentioned the idea of incorporating thses ideas into the practice. It did not go well. Hippy sh*t may have been mentioned, (as per a Brisbane Times article from a couple of years ago).

So putting the three together, I decided that the practice that I worked at was no longer for me. I couldn't see the point in working elsewhere, thinking that the lack of control would be the same everywhere.

In essence, I felt that the way forward was to go and do something else completely, or go and set out our 'own shingle'. That new business would have to have the clients interests at heart, ensure appropriate client protections were in place, and that we respected, and actively canvassed client values.

A few rushed months of rudimentary business planning later, and Viridian Wealth Management Pty Ltd was born.

Feel free to comment. I would love to hear what you think.

The Future of Financial Advice

Amongst talk of carbon taxes and MRRT's, there is some legislative discussion going on at the mmoment in Canberra looking at the future of financial advice (FoFA). In short, the bill is designed to improve acccess to financial advice. It covers quite a few areas including commissions on investment products, and opting - in to ongoing fees among other areas.

The FPA, while broadly supporting the initiatives, wants to delay implementation (which now seems to be happening), and has some concerns with some other areas. THE CEO of the FPA,  has been quoted today saying it was important that the legislation achieved the following benefits:

Consumer benefits

- To help consumers know how to find a financial planner who is appropriately qualified, educated and works to high professional standards, and clearly separate these professionals from others who give advice
 - To help consumers to easily understand what advice they’re getting, who they’re getting it from, how much they pay and how they will pay

Profession benefits

 - To make sure the professional standards of financial planners are increased over the coming years
 - To make sure that all who give advice put their clients’ interests first

I couldn't agree more.

In the midst of this talk for reform, maybe now is the time to talk about some other industry standards. It is my belief, and soon I will out it to a test, that the majority, no the vast majority, have no idea what happens to their money once it is put in the bank, sent to their super funds, or invested.

Having an ethical policy, or CSR page is good, but what is important in tranparency. Under the guise of commercial in confidence, there are a number of fund managers that will not reveal where they invest their funds. Errr, your funds.

How do you feel about mining? How about uranium mining? What about tobacco, or labour standards, or the use of child labourers by foreign multinationals? Regardless of what your personally held values might be, you should be able to invest in line with, free from the myth that your returns will be negatively effected by your decisions.

The vast majority of people fail to meet their retirement goals without advice. Clearly, returns are important, particularly in light of events over the last few years. However, even keeping this in mind, peoples priorities are changing. People are recycling, composting, growing their own vegies, and keeping some chooks in the back yard. On top of that, people are starting to become aware that there are industries that they don't want to support, and some that they do.

It is one of our guiding principles that we take peoples values into consideration. It would be nice to think that this might be the norm in the future, rather than the exception.

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Happy New Eco-year!!

Happy New Year everyone.

This year, we really saw in the New Year in style.

For us, the holiday period is really about spending time with family and friends, and we got the opportunity to spend 3 days at the eco retreat that is owned by some friends of ours. What's more, we got to enjoy their company, and that of another family of lovely people.

The retreat is only a 2 hour drive from Brisbane, and available for letting. There are mountains, walking tracks, swimming holes, clean air and fantastic views of the surrounds, and, on a clear night, the stars and planets.

The house (above) is situated on land overlooking a gorge. It has solar power, a composting toilet, and a great story on how it got to be where it is now.

Relaxing in the falls, and exploring the area was a great way to start the year and focus on the things that were really important.

In planning your finances, I believe that there are some basic fundamentals that don't change whether we are in the midst of a boom, or when times aren't so good. They are:

1. Spend less than you earn, and do something smart with the difference;
2. Use debt, but use it wisely, and to a level that is comfortable (and even conservative);
3. Ensure you are protected against the things that you can't control.

Being able to spend some time away from distractions with the people most important to me allows me to remember the reasons why I am doing what I am doing with our business, and ensures we keep our eyes on those fundamentals for our family, and for our clients.

Finding the balance between working and lifestyle can be tough, but a few days spent with family and friends in the fresh air has helped us to remember why we are doing all of this, and what is important to us.

Steve

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