Your financial team is your set of sockets. Each socket head represents a profession. One socket will fit perfectly to provide the solution for each of your challenges, while the rest will be irrelevant for the moment.
I Can Do It Myself, Can’t I?
Many entrepreneurs make the mistake of wearing too many hats, of being a jack-of-all-trades but a master of none. I was recently discussing with a physician client that the guidance, strategies, concepts and overall plan I implemented for him were not rocket science. Nobody is born knowing this stuff, nor that of any other profession. If he were to attempt do-it-yourself solutions, I’m sure with enough time and effort he could do a fine job.
He could learn what it takes to be his own lawyer if he put his mind to it. He could be his own accountant and not just learn the profession, but keep up with the myriad of changes to tax legislation. He could be his own financial planner and learn the strategies and understand and implement the six disciplines or areas of financial planning. It is not a limitation of smarts we all encounter, but a limitation of time. Trial and error takes time and has a cost: the cost of mistakes, stress, and opportunity, to name a few.
Financially these costs will add up to make any profession that you might pursue as a hobby prohibitively costly. Not only is your time very valuable, but the enjoyment we have for each of the fields we have chosen is a value you cannot put a price on. I cannot imagine the level of stress we would encounter if we tried another profession and attempted to become proficient at it, especially if it was not our calling. So here’s to your pursuit of loving what you do and achieving lasting fulfillment in the gift you give the world.
You may have heard to reach a level of mastery in anything you need to invest 10,000 hours. That is the price you pay on the path to becoming great at what you do, to master it.
I cannot think of a reason someone would dabble in another field when they can earn much more money and satisfaction honing their own skill in the field of their calling. We inherently know that specialization will earn the most amount of satisfaction and reward.
I’ll share a study I read and that I quoted in one of my YouTube Q & A videos (you can view any of these 2-5 minute videos by typing in The Financial Toolbox on YouTube to find my channel). This study was recently released by a Coalition for Professional Standards for Financial Planning (FPSC) – a non-profit organization that develops, promotes, and enforces professional standards in financial planning by granting and enforcing the international Certified Financial Planner (CFP) certification.
It revealed that in addition to most Canadians feeling they have insufficient knowledge to properly plan for their financial future, they were also deeply unaware of a lack of regulatory standards in Canada for financial planners. In fact, more than half of the Canadians surveyed did not know there was a difference between a financial planner and financial advisor. Generally, an advisor is anyone who renders financial services and advice to clients.
A financial planner is defined as one who prepares financial plans for clients. Financial planners provide custom plans for a person’s specific situation to meet specific goals, providing advice that pertains to the entire financial and life situation of the client.It was a shock for me to learn that more than 50 percent of those surveyed didn’t know the difference. In addition to this, there are no legislated standards in place for those who call themselves financial planners or offer financial services. If you work with someone who calls themselves a financial planner they are not required to obtain any credentials whatsoever! They don’t even need to know how to balance a chequebook. Think about that for a moment.
Surprisingly, the person who many people will rely on to plan their financial future does not need to have any credentials. Match that with the fact that we have an aging population, rising debt levels, more complex financial services and tax legislation changes every time another budget comes out. Many people feel nobody takes the time to help put the pieces of the financial puzzle together in a complete and comprehensive plan custom made for their situation.
There is indeed value in advice, an Ipsos Reid poll shows. Having a general financial advisor, no matter what a person’s age, helps develop more wealth at a faster rate. With a CFP the figures go further. This is particularly important for business owners, who need to focus on their operations and shouldn’t worry about how they will survive if there is a downturn in their market.
Business owners and entrepreneurs are a lot like sports stars. Often there is an intense period of making a lot of money; the trick is to plan for when there is no money coming in. CFPs have a larger financial impact on where you end up than any other professional, hands down.
Like most people, you started your business to provide the service or product that you want to bring to the world. But like many you were likely not formally taught all the aspects of running the business. You cannot be successful if you are to handle every aspect on your own; you need to have a financial team. Then you need to give up sufficient control to have them do what you hired them to do. Selecting the appropriate professional is the most important step.
This person has to have the skills to understand the scope of your situation, while having the experience and expertise to advise you honestly, keeping your interests above all else. As a client you need to bring an open mind to the discussions with them.
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