A frightening lack of understanding

“Many attempts to com­mu­ni­cate are nul­li­fied by say­ing too much.” — Robert Green­leaf

There is noth­ing more fright­en­ing than a lack of under­stand­ing. I’ll never for­get the antic­i­pa­tion (ie. feel­ing of absolute ter­ror) as I removed my Army sur­plus back­pack from the Land Rover after hours of “off-road” travel. My chap­er­one spoke with my Masaai fos­ter fam­ily for a few moments and drove away, assur­ing me that she would be back in a few weeks. That’s when it set in. I had just been dropped off in some remote African loca­tion for two months and could not under­stand a sin­gle word any­one said.

Steve Jobs had yet to invent my iPhone with a cool trans­la­tor app and Regis Philbin was nowhere to be found offer­ing to phone a friend. I learned many life lessons that sum­mer, but the best ones started with my admit­ting that I didn’t under­stand some­thing and ended with more lis­ten­ing than speak­ing. I still find that to be true.

Does address­ing your finan­cial and estate plan­ning feel like a trip to a for­eign cul­ture? Do you leave the expe­ri­ence with renewed energy and clar­ity or just dazed and con­fused? With­out a doubt, the world of finan­cial plan­ning and invest­ing can get com­plex, but you owe it to your­self to be sure that you are “in the know” when it comes to your finan­cial goals. Whether you man­age your own money or work with a pro­fes­sional plan­ner, there are steps you can take to under­stand the lan­guage of finance.

At the most basic level, much can be learned by vis­it­ing free web­sites like investopedia.com and moneychimp.com, under­stand­ing that many of these sites are laced with sales oppor­tu­ni­ties from var­i­ous ven­dors. If you are look­ing for a more for­mal approach to your edu­ca­tion, con­sider teach­ing sites like investools.com to take your learn­ing to a new level. These types of web­sites offer a nice third-party edu­ca­tion rang­ing from novice to expert, with no wor­ries of mis­placed motives.

If you are work­ing with a pro­fes­sional plan­ner, famil­iar­ize your­self with read­ing mutual fund reports from Morn­ingstar (morningstar.com). In the end, your advi­sor should be a career pro­fes­sional with the heart of a teacher. Look for a pro­fes­sional advi­sor with career cre­den­tials like CFP® or CFA® with the abil­ity to break down com­plex finan­cial plans into under­stand­able lan­guage that is not sales focused. Keep in mind that your plan should be con­tin­u­ously man­aged and not a trans­ac­tion based event.

Real­ity Check: It is your respon­si­bil­ity to under­stand, at a basic level, what is being done with your invest­ments and estate plan­ning. If you man­age your own money, you must con­sider it a seri­ous part-time job. Jump in with both feet and invest in some per­sonal finance train­ing from a rep­utable source and read every­thing you can get your hands on. If you pre­fer to work with a pro­fes­sional plan­ner, be edu­cated enough to engage only with a pro­fes­sional plan­ner or team of plan­ners and not sim­ply finan­cial salespeople.

Real Advice for Real Peo­ple: The most impor­tant part of com­mu­ni­ca­tion hap­pens at a very basic level. Sim­ple and trans­par­ent lan­guage will always yield the best results. If you feel over­whelmed and con­fused, admit your lack of under­stand­ing, lis­ten and learn. Beware of lan­guage that appears to point only to the pur­chase of a com­mis­sion based invest­ment or insur­ance prod­uct. When it comes to your money “hakuna matata” (Don’t worry, be happy) does not translate.

When in doubt, ask for time to research and under­stand the rec­om­men­da­tion before committing.

Rc Arse­neau is a CERTIFIED FINANCIAL PLANNER™ who lives with his fam­ily in Delaware. Please sub­mit any ques­tions or topic requests to AskRc@mail.com. The infor­ma­tion and opin­ions in this col­umn are pro­vided only for edu­ca­tional and enter­tain­ment pur­poses. Any ref­er­ence to a finan­cial prod­uct or strat­egy is not to be con­sid­ered an endorse­ment or rec­om­men­da­tion. The infor­ma­tion is of a gen­eral nature only and does not take into account your indi­vid­ual objec­tives, finan­cial sit­u­a­tion or needs. It should not be used, relied upon or treated as a sub­sti­tute for spe­cific pro­fes­sional finan­cial, legal or tax advice. Invest­ment Per­for­mance may vary due to tim­ing and expenses. Rc rec­om­mends that you obtain your own inde­pen­dent pro­fes­sional advice before mak­ing any deci­sion in rela­tion to your par­tic­u­lar require­ments or circumstances.

Posted by RC Arseneau on May 8 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.