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.