Q: Most people like the idea of taking control. Most people want to have a lot control every step of the way, especially when it comes to their money. What are some of the things that financial advisors need to do in order to help those clients that want that control?
A: Well I think it would be really important for them, if they are going to be a “do-it-yourself-er”, is to really know what they need to know, and how do they create that, how do they do that? They can’t know everything, so they have to set some boundaries, right? They have to set some boundaries to “well what is it that they need to know, and what they need to know, what is it that helps them make a decision?” So we have to set up guidelines to help move forward the way they want to move forward… to filter their information and just help them understand. Everything in life, success is built on some sort of boundary. Think about it, the person who is an entrepreneur, he goes the work every single workday according to a schedule. A successful entrepreneur has a schedule. Most people wake up-- who’s that guy who sends out the tweet “It’s 4:32am” –Jocko Willinks—“It’s 4:32. Are you ready? It doesn’t matter! Go!” In other words schedule is really important to him. Taking advantage of time is really important to him.
Successful businesses have work schedules, that’s a boundary. The difference between a pasture and a prairie is a fence, that’s a boundary. The median between lanes going north, south, east and west are boundaries. It helps you be successful and get to where you want to go. So in the process of deciding to do your own investments, what are your boundaries? If you don’t have boundaries, you’re bound to do anything and doing anything is not the right thing. To do the right thing is to know you, know your goals, understand your limits, understand the limits of the investment, to understand your limits of time, and put all those things together and all those things are boundaries. So I think the biggest thing we need to know is that those boundaries are not constraints, or not just constraints, they are also part of the creative process. If you know where you’re not supposed to go, then you also know where you’re supposed to be, and if you know where you’re supposed to be now you can make the most of it and concentrate. Now you can begin to drill down and figure out what it is you really need to accomplish. So I think setting up guidelines or establishing boundaries is really important and not to see it not as something that is restricting you, but something that is freeing you to understand what it is you really need to focus and how it is that you need to go about doing this work so that you know you’re making progress in the right way.
I’ll give you another boundary, and the boundary is a map. So Lanelle and I, my wife, we're going to North Carolina, we’re in KY and heading to NC, and we hadn’t been to NC in a long time, we usually vacation in Miami, but were going to Wilmington, NC. So we get in the car running late, we’re in a hurry, pack the car, get in the car, and drive about 2 hours. We see a Dairy Queen, the kids wanted something to eat, so we stop and get Dairy Queen and while we’re sitting there, we realize that we’ve gone two hours south on I-65, we haven’t headed east whatsoever yet, and that means we’ve gone the wrong way. So making progress…there’s something more important than making progress—than just moving--- it’s about making progress on where you need to be. Where did you start, where are you going, and what’s the best route there? You have to set up these guardrails, these guidelines, these boundaries to keep you on that path if you believe that’s the real path for you. I think you ought to give that some thought, “what are your boundaries”?
"If you know where you’re not supposed to go, then you also know where you’re supposed to be, and if you know where you’re supposed to be now you can make the most of it and concentrate."
Q: So, when we talk about, as it relates to the financial planning and retirement and all that, what is an example of a boundary you would give a client, for instance?
A: Ok, so you want to invest your own money? How do know this investment: Investment A, B, C, or D is right for you, or maybe a little bit of all of them? How long are you supposed to wait before you declare that path a success of failure? How much money should you put into it or those things? To one thing or four things? All of those are, really, expressions of boundaries. We have to make sure that we give everything an honest shot, that taking that shot is being honest with ourselves, and that the amount of money we put into it is being honest with our future and that we have done the right things.
That would be example of boundaries: You need to know whether investments are truly appropriate to you- what are the guidelines to decide that? You need to know how much money should go in there- what are the guidelines to decide that? You need to know how long you should wait before you move it again- what are the guidelines to decide that? They’re all there, it’s not like you have to make them up, they’re there. They’re there for you to see, you just have to want to see them. And that’s what a DIYer is going to have to learn to do.