What is the cost of NOT having a financial plan?
WRITTEN BY: Gideon Drucker, CFP® AIF® ECA
A potential client once told me,
"I love your approach and your process. I absolutely know I need a plan, but I don't want to spend money on it."
Keep in mind she shared on her Right Fit Call that she,
· spends too much money,
· needs help organizing her cash flow and
· wants to better understand if she's on track to accomplishing her financial goals
To reiterate, she freely admitted that she was frivolous with her income & spends too much money...yet she chose to draw the line at spending money on a financial plan that would address and solve those same financial worries.
As they say, you can bring a horse to water but you can't make them drink.
I found it to be a valuable conversation.
It helped crystalize this sentiment: There's a difference between HOPING that you will become financially independent and doing what it takes to get there.
A full comprehensive financial check-up comes with a cost (just like any service worth anything to you.)
The cost of not knowing what you're missing & the cost of not knowing that your financial decision making is leading you astray is substantially higher....and it's not just a one time "fee."
It will ravage you every single year until you address it. The problem is that you won't see this cost for inaction until it's too late.
The difficult part is that because the "cost" of not having a financial plan is NOT a line-item on your credit card bill, it can feel like it doesn't exist.
Again, that's the irony inherit to not doing something that you know you need to: you only realize what the real cost of not doing it once you actually get it done.
That individual will probably spend more money in the next month than the fee we would have charged to build a plan that would put give her the blueprint & the technical know-how to arrive at 2024 in substantially better financial shape.
What happened here is clear. She chose to focus on the short term cost of our guidance over the long term value (both in tangible dollars and in peace of mind) that our Financial Life Plan is designed to provide over the next 20-30 years.
(And this is to say nothing of the fact that the analysis we provide with regards to your investments, insurance, and estate planning may end up helping you to discover that you're spending TOO much money in fund operating expenses, management fees, insurance costs etc. and actually do something about it.)
In short, she made her decision about her financial planning future the same way I determine what pair of pants I might buy... (que my internal dialogue: "Well, they all keep my legs warm so lowest price tag wins")
In my experience in working with my personal CPA and Estate Attorney, I've come to realize this: cost is only a factor in the absence of value.
In those relationships where I am the client, if I feel I'm getting the value that I want, I am HAPPY to pay these professionals their keep.
They are doing work I can't do, I don't want to do, and are going above and beyond to take care of me... I'm a happy camper.
As I am proud to share with prospective & current clients: we are not trying to be the lowest cost option available to you.
I always think of the joke about flying, "it's better to not think about the fact that every part of the plane you're sitting in was built by the lowest cost provider."
Our goal is to provide unparalleled VALUE.
With something as serious and life altering as financial decision making, your choice should hinge on the value you expect to receive RELATIVE to the price you will be paying.
Allow me to address "free financial plans" for a moment. We know they exist out there.
If an advisor is offering a "free financial plan" contingent on you becoming an investment or insurance client... I have 4 questions for you:
1. What service have you ever received for free, in your entire life, that made an actual difference to you?
2. How much value is that advisor placing on your financial plan if they are not compensated for putting it together?
3. How much value, truly, will you place on the financial planning process knowing that you are not putting any sweat equity into creating it?
4. How objective could that financial plan possibly be if it's just a means of getting to the "good" part? (ie investing your money!)
We charge a flat fee to build out a client's Financial Life Plan®.
I am proud to share that because I am confident in what we provide. It takes time. It takes effort.
Our Financial Life Plan® is a stand alone, objective process that will let you know what you need to know… whether you choose to continue working with us or not!
As always you can schedule a 15 minute "Right Fit" call here so we can figure out together if there's more you can be doing now in your financial world.