In my meetings with you or in my communications to you, I commonly stress financial education; I WANT you to know what is happening in your portfolio, what I am doing for you and why these are good steps. Also commonly expressed, I state to you that over-education is a weakness that I fall prey to more often than not. Let me use this monthly exchange to state why I’m not going to change, and relate to you a very personal story to emphasize the point.
My first daughter got married this past weekend. It was an emotional event for sure (and, yes, he’s a great guy) but marvelous. Though I’d willingly and humorously critique estrogen-fueled planning of all the affairs (and, also yes, my wife helped my daughter do it all, no credit to me), let me instead tell you something that was nagging me in the weeks leading up to the wedding: Though my wife and I didn’t pick up the tab for everything, we actually could have the wedding.
Please contrast that reality with this comment by another dad that really hit me hard; “I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding”
A professional writer, Neal Gabler, self-deprecatingly stated the above in a lengthy and brutally honest article about financial stability in America[i]. As a Financial Planner reviewing his history, I can tell you he made certain bad decisions…but then I want to add the excuse he didn’t know better. Per the article, and other related ones that hit the press, results from a recent Federal Reserve Board survey found that over 47% of American’s could not readily cover a $400 unexpected expense. I probably don’t need to tell you that $400 is small potatoes as far as emergencies go.
Further, the above fragility is NOT because our USA financial system is unsophisticated. IT IS NOT..but the unceasing array of options have confused / enabled more than helped the average American. Researcher Annamaria Lusardi and colleagues found[ii];
“….that, in general, the more sophisticated a country’s credit and financial markets, the worse the problem of financial insecurity for its citizens. Why? Lusardi argues that as the financial world has grown more complex, our knowledge of finances has not kept pace. Basically, a good many Americans are “financially illiterate,” and this illiteracy correlates highly with financial distress. A 2011 study she and a colleague conducted measuring knowledge of fundamental financial principles (compound interest, risk diversification, and the effects of inflation) found that 65 percent of Americans ages 25 to 65 were financial illiterates.”
I’m on my high horse for a minute, but I must shout how unfair it is to say to American’s; “You are responsible for your financial affairs”, and then never teach them how to do it right. On a higher plain, I would also argue it is not good for America (the country) to be stressed and exposed in this fashion. The above realities combined with a personal passion on my behalf are why I do educate more than the norm, and why we do not just talk about planning but put wise steps in place for the achievement of those outcomes. Then, as opposed to many advisors in this industry we are constantly checking to make sure things stay on track and always, always, acting in your best interests.
It feels very good to be ‘wedded to you’ in this commitment, and for Wellspring Financial Partners to be governed by law to have to take a comprehensive view of your affairs so that you are never part of the economically vulnerable.
Patrick Zumbusch
P.S. Though I provide the reference below, here’s an easy link if you want to invest the time to read the Atlantic article;
http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/
[i] “The Secret Shame of Middle-Class Americans” (Neal Gabler, The Atlantic, May, 2016)
[ii] “Financially Fragile Households: Evidence and Implications” (Annamarie Lusardi, Daniel, Schneider and Peter Tufano, The Brookings Institution White Paper, 2011)
