For folks who live in the Atlanta area, you’ve probably heard of Clark Howard. Howard is a popular radio host who often provides great money-saving tips, advice on how not to get scammed, and the best deals in town. Listening to Clark for a long time now, I have this perception cemented in my mind that Clark is the most frugal guy in the world—every penny is accounted for, and if something isn’t a necessity, it shouldn’t even cross your mind. When most people think of a financial advisor, they probably imagine someone like Clark Howard.
In undergrad, I studied economics as opposed to business or finance like many people in this industry. Economics and finance don’t necessarily see eye to eye on everything, but trying to be as unbiased as possible, I still have to say that economics has it right. If you remember, in Economics class you studied the concept of utility. Utility is the measure of happiness or satisfaction, and a person’s benefit and wellbeing are measured by utility as opposed to money. So, an accomplished person from an economic perspective is the one who has the highest utility equation as opposed to one who has the most money.
Now, having said that, I want to clarify what our team at Silver Penny does as financial advisors. Our goals are not to badger our clients and monitor every penny they spend. We do not measure success by the value of your portfolio but by your satisfied lifestyle and your achieved goals. Money in and of itself means nothing. It is a tool. Our goal is to make sure you use that tool properly to achieve what is most important to you.
Having a vision and setting goals can be viewed as prerequisites for establishing a proper relationship with an advisor. I’ve worked with clients who didn’t have goals for their money, and it was always a challenging relationship because at the end of the day, money is not a goal— it’s what that money can do for you, your family and your community. I remember sitting in a meeting with a man in his early 80’s who had just recently realized that he had more money than he will ever be able to spend in his lifetime; turns out, he always wanted to try scuba diving, but he never allowed himself because of that pressure to save and be frugal. I don’t ever wish that on anyone. Our goal is to understand what your goals are, what kind of lifestyle you want, how much you would like to leave as a legacy, and how to make all of that happen. There needs to be satisfaction to financial planning. If you leave your advisor’s office, and you feel like a three year old that just got scolded for reaching into the cookie jar then there might be a problem. Ideally, people should understand how much they make, how much they need to live comfortably, what they need to be saving for their short- and long-term goals (retirement), and how much to give back to their community. Is this the majority? No. Most people don’t have that figured out, and I think it has a lot to do with the fact that people don’t engage with an advisor using goal-based planning.
So, Clark Howard definitely has his place, but don’t let that image distort your idea of financial advisors. I see how people work every day, putting in all of their energy so they could provide, save, and give, and in that daily grind, goals and perspective can sometimes fall by the wayside. Set both short- and long-term goals, and don’t let it be just about the money, but let it be about your utility. I believe if everything is put in its place then a prudent person can earn, live comfortably, save wisely, and give generously throughout their career. In retirement, that person will know what they have and how much they can spend comfortably without running out of money.