Working With A Financial Planner Is Like Wearing An Apple Watch
My name is Brendan Dooley and I’m a Philadelphia-based financial planner. I’m also a bit two-faced. Let me explain. In my business, I evaluate and add new technology allll the time. I’m always eager to add software that can help me serve my clients, add new services, or add time back in my day. In my personal life, I’m probably more of a late adopter and a borderline laggard. I’ve long-employed a “less is more” approach and often crave simplicity. I am always about 3-4 iPhones behind. We just got an Echo for Christmas and I hate how much I love it. My fiance has had several Apple watches over the past few years and she loves them. I always wondered, in between yelling at clouds and telling kids to get off my lawn, why I’d need a smartwatch. Turns out, I LOVE my Apple watch and the added connectivity.
I get my texts on my wrist with my watch. I can change the song on Spotify. I can spontaneously jack up the volume of Hall and Oates’ classic “Kiss on My List” (don’t @ me, it’s a great song) when the mood strikes me. I can connect my Spotify to my Echo from the other room. But those are hardly my favorite parts, and certainly not why I’m writing this blog.
Salt N Pepa’s Here
I established certain exercise, move, and stand goals when I “set up” my watch. Throughout the day, it monitors how much I’m…you guessed it…exercising, moving and standing. At certain points throughout the day, the watch will send me push notifications that politely say “hey, you’re usually further along than this. What gives?” Or, they might suggest I just stand up for a minute. Or focus on my breathing for a minute. The first few times, I felt attacked. Now I LOVE this feature. Sometimes I get going with work and all of a sudden it could be mid-afternoon and I haven’t moved for hours. Time to do a lap. Or head to the gym. Whatever. Having an objective party prompt you to take action is great, and that’s exactly what I do for clients. BUT, this is where a financial planner is even better than the watch. Instead of just prompting you to take generic action, I give clients specific, actionable advice and walk them through exactly when they should be doing these tasks.
I love helping my financial planning clients accomplish their goals. But they’re busy people and they could use a little help with the execution of some of the things they say they want to do. Little things that add up to big things. I’ve previously written about the tax advantages of contributing to a 529 plan here. Having someone prompt you at pre-determined intervals to, say, increase your 529 plan contributions can go a longggggggg way over 18 years. For example, contributing $25/month for 18 years at a hypothetical 6% return (compounded monthly) will give you a 529 balance of $9,683.83. Not bad. But what if you increase your monthly 529 contributions by just $300/year, or another $25/month, every year? For example, $25/month the first year. $50/month the second year. $75/month the third year, and so on through the 18th year. This small behavioral change, spread out over 18 years, gets you an account balance of $76,690.53. Being able to count on someone else watching your back and making sure you’re doing everything you should be doing with your money is priceless, in my opinion. But in this example, having someone to “nudge” you is worth an extra $67,000. There’s too much at stake to forget to do something small like this, let alone take care of the big planning tasks.
Without someone reaching out to say “Hey, HSA contribution limits went up, change your payroll contribution,” you might remember to do it. You might not. I bet you have a zillion other things to remember though, all of which are probably more pressing than your HSA contribution. Work. Pick up the kids. Get your oil changed. Call this person back about something. Exercise? Sleep? Taking care of your finances is important and should not be relegated to the back burner. Outsource it to a professional to push it. Push it real good.
Pull
After a few weeks with the watch, I discovered a fun little feature that lets me and my fiance compete head to head a week at a time. It now sends us notifications when the other completes a workout and lets us monitor how the other is progressing throughout the day. We’re both competitive people, and a funny thing started to happen after the first weeklong competition. We both started exercising with more intensity. Instead of my usual routine, I found myself working out longer, doing way more (read: any) cardio, and paying close attention to my heart rate during workouts. Instead of approaching exercise with dread, it became a game. I was motivated and pulled to exercise, rather than my usual feeling of bittersweet obligation.
Then, a really bizarre thing happened. Before, I used to feel like calories burned at the gym were a license to eat anything I wanted. Now that I knew how much work went into burning certain amounts of calories, thanks to the watch, I was actually more selective about what I ate. I became acutely aware of posted calories, where available. In short, the success I was having made me eager for more success. This is an interesting parallel to working with a financial planner. Getting started with exercise can be daunting. Same with financial planning. You probably have different accounts all over the place. It takes some energy to gather all of it to turn over to your financial planner. And it might even feel like a chore. At first.
But the goal is that once you’re a few meetings into the process, you’ll start to see the plan come together. You might even, dare I say, look forward to meetings once you see progress being made. It doesn’t happen overnight, but learning you can retire a year earlier than you thought should put some pep in your step. Or, at the very least, help you make decisions within the context of your other goals. Take for example one of my clients that wanted to upgrade some jewelry. I could tell this was not the first time they discussed this and that it was important to them. Meanwhile, our planning discussions had been focused, in part, on how much it was going to take to put their child through college. After asking them if they would rather have the upgraded jewelry or make more progress with the 529, they opted to hold off on the jewelry. Whatever your goals are, financial planning can help pull you forward and transform your perspective of money from an obligation to “cool, what else can I do?”
Data
One of my favorite functions of my watch is how much data it gives me about me. I installed a sleep tracking app and it turns out I suck at sleeping. It shows me in no uncertain terms how my nights are going. I see over time how I’m doing and taking an active approach to getting better sleep. I bought blue-light blocking glasses to wear for work in the evening. I try to read in bed before going to sleep. I can even see how I slept on leg days. The heart-rate monitor says I dipped below 40 beats per minute (BPM), which has prompted some interesting discussions about whether I am in fact alive or just a robot. The watch told me about a problem I didn’t know I had. This new source of information allows me to make better decisions for myself and who knows what would have happened without it? How long would I have just assumed the way I felt when I woke up was “normal?” Not to mention whatever is going on with ya know, my heart.
Working with a fiduciary financial planner is just like wearing the Apple watch. I am feeding my watch information, like my heart rate and how much I toss and turn at night. This is information that would have previously been worthless to me. Or rather, I wouldn’t know what to do with it or I would have struggled to measure it correctly by myself. Is 194 BPM during a pickup basketball game too much? It is. Is 8% REM sleep good? It’s not. Is 8 Oreo’s in one sitting too many? Don’t tell me how to live my life! Sorry, wrong blog. So I share my heart rate and my sleep data with my watch by wearing it to bed. It analyzes that raw data and gives me the feedback I’m asking for in handy wrist-sized reports that are actionable and easy to digest. Best of all, the watch doesn’t have any ulterior motives. It just wants what’s best for me and is helping me get to where I said I wanted to go when I built my watch profile.
This is exactly what you should expect from the relationship with your financial planner. The whole point of the work you do together is to help you accomplish your goals. Some of that will involve the exchange of information from the client to the planner to be analyzed and then given back to the client in a way that’s useful. Social Security estimates. Tax returns. Pay stubs. Benefits information. Things that might not mean much to you in a vacuum. But with the help of your planner, you can collaborate to help you make better financial and life decisions. Make no mistake that “better” is not limited to just adding more to your net worth. Better, to me, means using your money to improve your life. And only through an objective analysis can your financial planner help you spot the opportunities to take advantage of everything you have at your disposal.
If I’ve inspired you to learn more about working with a financial planner, I hope you’ll send me an e-mail at brendan@meaningfulwealthmanagement.com to learn more about how that would work for you. You can also learn more about fee-only financial planners here.