A couple days ago, I tweeted[i] a question that received some interesting responses:
“Is it possible that financial advisors’ bent towards long-term saving strips clients of joy today?”
The responses I got were vociferous, both in support and opposition of the implied comment in my question. Interestingly, all of these responses were from financial advisors. Here was the first grenade lobbed back in my direction:
“It’s just not possible; it’s a fact. We’re in the business of selling deferred gratification.”
That comment came from a good person who is no doubt an excellent financial advisor.[ii] But, this faulty mindset is, without a doubt, the majority opinion of the estimated 500,000 plus who refer to themselves as some form of financial advisor or professional in the lower 48. So, financial advisors are in the business of selling deferred gratification, knowingly stripping our clients—YOU—of joy today? How do you feel about that? Does that make you want to run out to hire a financial advisor?
This faulty premise leads to a number of mistaken presumptions and results. First, many financial advisors DO see themselves as the protectors of their clients’ futures, an ostensibly noble mission until we’re reminded most financial advisors also just happen to get paid more when you defer more. There’s no way around this blatant conflict-of-interest, and any advisor caught obscuring this truth behind a veil of self-righteousness is deluding himself or herself.
There is no question that the job—even the duty—of a financial advisor in almost every case is to encourage clients to consider and establish a reasonable plan for deferring some of today for tomorrow, and to occasionally protest an attempted withdrawal spurred by a temporary urge in spite of better judgment (like the time a 20-something client wanted to take an early withdrawal from his Roth IRA to buy a jet ski). But I believe financial planning focused too heavily on the future is little better than planning encouraging an “eat, drink and be merry, for tomorrow we die” approach.
While I absolutely believe we, as humans, do have a tendency to overvalue that which is seen or imminent over that which is unseen and seemingly distant, there is no denying the “one-in-the-hand-two-in-the-bush” adage either. We must repel the urge to make a comprehensive financial plan the protector of only the future—stripping funding from today for a tomorrow not promised. The ideal financial plan (some might say, The Ultimate Financial Plan…ha, ha, ha…that wasn’t planned…) helps manage the short-, mid- and long-term, balancing money and life.
Encouragingly, I believe there is a movement among financial planners awakening to the reality that in order for a plan to be relevant, it must positively impact more of life’s timeline. In response to my tweet, Nathan Gehring, a Wisconsin cheesehead (and financial planner and blogger), called for balance and Dr. Carolyn McClanahan, a physician-turned-planner in Florida, noted she feels a duty to provide a plan more relevant to today. Interestingly, Dr. McClanahan and I both share near brushes with death, personally, that likely impact our insistence on this issue. But it doesn’t take a near-death experience to grasp this important truth.
(By the way, the biggest mistakes planners and clients make regarding deferred gratification are not in our saving and investing patterns, but in our choices of vocation…how we choose to spend the estimated 101,568 working hours in our lifetime.)
In 1902, Alice Morse Earle wrote, “The clock is running. Make the most of today. Time waits for no man. Yesterday is history. Tomorrow is a mystery. Today is a gift. That’s why it is called the present.”
How much of life do you spend chasing tomorrow?
[i] Yes, it’s true. I’ve embraced the social medium that took me the longest time to “figure out” or in which to find any redeeming value. I’m officially a tweeter…or twit, if you will. If you’re into that sort of thing, you can follow me via @TimMaurer. And, if you’re like me, reluctant to see the value in Twitter, in next week’s post I’ll be sharing how Twitter has become my #1 source for financial news—if you can believe that—and why I think it could really benefit you too.
[ii] Please also be mindful, if you’re not a Twitter aficionado, that the medium restricts questions and comments to no more than 140 characters (as my regular readers gasp in amazement that I’m capable of articulating anything in so few letters!). As a result, tweeters often do take short-cuts to get right to the point, sacrificing context that may help substantiate a point.