Build Your Own Financial Olympic Team
August 19, 2016As I write this, Michael Phelps is about to hop into the pool in search of his last Olympic gold medal. He has one race left in this Olympics and has been as dominant in this Olympiad as he was 8 years ago. Throw in Katie Ledecky who has been smoking the field in her races, Chase Kalisz and Jack Conger (other Maryland Olympians who have medaled) and my home state has more Olympic medals than every country except the USA right now.
If Maryland were a country, we’d be #3 in the world in Olympic gold medals. That’s astounding that so much talent is concentrated in one area. I hardly think it’s coincidence. Kids here grew up wanting to be Anita Nall or Beth Botsford or Whitney Phelps or Michael Phelps, hometown kids who made the Olympic team and came home and encouraged others to work hard and follow their dreams, and some dedicated kids and parents put in the work required to continue the tradition.
Lots of talent, all in one place, performing at a high level – that sounds a lot like the team I’m a part of at Financial Finesse and the team I try to help people build in their personal financial lives. One person can’t know everything about the world of personal finances, so as I work with people to improve their financial lives, I want them to view the people in their “financial family” as Olympic-level advisors. If they can’t imagine the people around them as high-level performers, then maybe it’s time to find a new financial team! Here are some of the positions you should have on your high-performing financial team:
Primary care physician: I can hear the “What??? A doctor isn’t a part of a financial team!” thoughts going through your head. But if you’ve talked to as many people as I’ve talked to who are in financial distress because of serious medical bills, you might see your physician as a key to preventing financial disaster down the road. As a guy, I am not always the best at getting myself into the doctor’s office on as regular a schedule as I perhaps should. So I have people in my life who periodically remind me to take care of myself. Focusing on your health and having a relationship with your physician where you can ask questions, challenge “conventional wisdom” and manage your health in a way that works for you is a key step, and the physician is a critical part of your financial team.
Insurance advisors: This doesn’t have to be an insurance salesperson but someone (or someones) who understands the importance of insurance coverage. Auto insurance – what coverage matters? How high can a deductible be and still be effective? What factors drive pricing?
Life insurance – for your life, is term or permanent better? Why? How much should you have?
Health insurance – which plan is appropriate for you and should you have a health savings account compatible plan? Long term care – is it appropriate, and what factors drive pricing? This is just a small sampling of the types of questions your insurance advisors should be able to guide you toward answering.
Investment coaches: This can be a financial advisor who manages your money, a financial planner you hire on an hourly basis, or a friend or family member who knows their stuff and will put your interests first. While most people who discuss investments want to talk about which stocks are going to be amazing, that is not the most important investment conversation to have. The big driver of your overall investment picture is the very boring question: What percentage of your portfolio is in stocks vs. bonds vs. cash?
For those who were all cash in 2008, they earned a positive return of around 1% when those who were 100% invested in stocks lost about 40%. Top line asset allocation matters! If you can work with your investment coach, whoever that is, to be sure that your asset allocation is in line with your goals (here’s a quick risk profile for you), you will be better off than most of the individuals I meet who have no clue what their overall asset allocation is.
Estate planning attorney: For your estate plan, I’m a big fan of working with an attorney who specializes in trusts and estates. Even if you don’t have a large estate, it still makes sense. In fact, I recently wrote a blog post about why I left my estate planning to a professional, so I’ll let you read that rather than restating the case here.
If you put together your Olympic financial team and work with them on a regular basis, I’d give you greater odds of becoming and/or staying financially secure for the rest of your life than if you opt for a 100% do-it-yourself model. After all, few of us are Olympians in all areas of our financial lives. As I get older, I’m learning that sometimes it’s not just okay but preferable to ask for some help in an area where you don’t feel like your knowledge level is where it should be.