Traditional financial advice has failed. The Great Recession of 2007 made it abundantly clear that Americans are utterly unprepared for a financial setback let alone a country-wide downturn. One major reason for this failure is that traditional financial advice focuses on financial products and services instead of the true reason for individual financial success or failure.
We all want that magic pill, that secret formula that can help us attain instant wealth. This is why there have been market stampedes for specific investment products at different points in history. In fact, in recent times we’ve seen people rush to buy specific stocks, real estate before the 2008 crash, IPOs or crypto-currencies all because they think they have found the magic formula.
If you’re of the get rich quick mindset, then I’ve got bad news: there are no short-cuts.
There isn’t a magic bullet, magic product or magic strategy that can help you succeed without some fundamentals. In addition, you need a good wealth coach and good financial advisors whose roles remain separate. Let’s look at the differences and why you need both.
Financial advice focuses on your asset portfolio by providing specific securities, investment or insurance advice. The financial advisor business model is focused on managing existing wealth or selling you investment products. You relinquish control of your assets and they do the work for you.
On the other hand, wealth coaching focuses on your own wealth education, growth and decision process. The coaching business model is all about helping you build wealth in the first place. You remain in control by learning how to change mindsets and manage your money smarter to make better informed investment decisions.
A wealth coach is your cheerleader, mentor and teacher that helps you discover new ways of solving financial problems and identifying mindsets that hold you back so that you can move forward successfully.
Let’s delve into the three main responsibilities of a wealth coach and how it’s different from financial advising.
1. Wealth Coaching Focuses on You
Instead of focusing on specific financial products or on your existing asset portfolio, wealth coaching focuses on you. People are the root cause of their financial problems, and the products that financial advisors sell are only tools – not solutions. You won’t find the solution to your financial problems by looking outside yourself to an investment tool offered by a financial company or financial advisor. We can all buy the same financial “tools” online or through our local broker, but those with financial intelligence succeed, and those without it fail. That’s why wealth coaching teaches you to look inside yourself to learn financial and emotional intelligence.
How to’s are not Enough
I recommend everyone read an enlightening book by the late Brian Klemmer entitled, “If How-To’s Were Enough, We Would All be Skinny Rich and Happy.” Teaching people the how-to’s of wealth building is like telling someone who is overweight to lose weight by eating less and exercising more. People who want to retire or pay off debt already know they need to spend less, save more and invest smarter, but they aren’t doing it. Why?
Even people who get educated on the Income Snowball system but are stuck in old mindsets, find it difficult to succeed.
One of our clients inherited a large sum of money. She worked with one of our Coaches to develop a plan for using the Income Snowball diversifying between three different alternative income-producing investments. She claimed that she was “too busy” to meet with her coach, so she took the advice of family and friends who encouraged her to do a costly home-remodel and other projects. In less than a year, all of her inheritance was all gone. She was the cause of her financial problems, and even a financial windfall couldn’t save her.
2. A Wealth Coach is Your Unbiased Partner
Because traditional financial advice focuses on investment product sales instead of people, it creates hidden conflicts of interest that limit the depth and breadth of the financial advice you receive.
For example, another client-couple was expected to reach financial freedom in slightly over seven years, based on projections from the Income Snowball calculator. After three years of building a passive income of over $4,270 per month with alternative investments and the Income Snowball, the couple mentioned it to a financial broker relative who strongly recommended that they sell all of their income-producing assets and get back into the stock market. The clients agreed. Little did they know that it would take $1,779,166 in a traditional growth account to create $4,270 in monthly income. So they liquidated about $400,000 in assets and put it all into the stock market. The result? Three years later they had a little over $435,000 and zero passive income. If they had not changed their plan, today they could be one year away from financial freedom with the Income Snowball.
Why did they do it? Internally, they were battling decades old thinking regarding investing, a herd mentality and succumbed to fear-mongering.
Don’t blame the broker. It’s just business. When a financial advisor is in business to sell investment products, then he must sell products he can profit from or he has no business. Even if a no fee, low cost, no commission product is better for your particular wealth plan, they aren’t likely to recommend it because they don’t make money from it.
What if you are slow building wealth because you’re not earning enough or you’re paying too much of your income in taxes. Will your broker suggest activities to increase your earning or tax savings ability such as starting or buying a business or buying rental properties when he can’t profit from those things? Not likely. This is an inherent conflict of interest.
Financial advisors serve an important purpose by selling and distributing some of the investment tools and products that could be useful on your road to financial freedom.
Yet, when the same person teaching you investment strategy stands to profit from selling you the tools to implement that strategy, there is a high risk that the advice you receive will be tainted with bias and centered on only those things that they sell. It is just business. Financial coaching educates you on your wealth building strategy without the bias of selling you investment products.
3. Your Wealth Coach is Your Teacher.
A Wealth Coach provides you with an unbiased education and helps you see how products and services will affect you. Wealth coaches have nothing to gain and nothing to lose if you purchase any specific product or adopt any specific strategy.
It’s easy to be intimidated by the world of finance because it has been overly complicated. That’s caused many people to believe that they need someone else to make their financial decisions for them.
What most people need is a clear roadmap with step-by-step instructions along with a coach to help them overcome their personal road blocks that hold them back from earning more money, controlling expenses, and investing smarter. At Tardus, we encourage our clients to delve into our library of educational videos, tutorials, step-by-step materials and group coaching meetings outside of their one-on-one meetings with their coach.
You need someone on your side whose only interest is to help you – not sell you. That is the advantage of wealth coaching.
The Tardus wealth coaching model helps you work with our wealth coaches through financial freedom. Thereafter, your need for wealth coaching slows to a few times a year until you are confident in your “retirement” without guidance from a coach.
For more information on whether a Tardus Wealth Coach can help you devise an accelerated strategy for financial freedom, call (808) 440-0688. Otherwise, check out www.tardus.com click on “resources,” and Strategy Session from the drop down menu. There you can request a complimentary strategy session with a Wealth Coach.