Thursday, September 24, 2015

“Don’t Just Listen to Me...”

© <a href="">Tatyanagl</a> | <a href=""></a> - <a href="">Kids Whispers A Secret Photo</a>
When I meet with clients, I tell them they don’t have to listen to anything I say.  Here’s the proof.  The terms of our Financial Planning Engagement Agreement read:

“You are under no obligation to follow either wholly or partially any of the recommendations or advice provided to you in or during the course of preparation of the financial plan.  You are solely responsible for making all decisions relating to such recommendations, advice, or suggestions.”

There you have it – the pressure is off.  Now you can breathe and easily approach what I have to say next with an open mind.

The one piece of advice I strongly encourage my clients to follow is: to pick one advisor who you trust and can help you make reliable, solid financial decisions.

People are generally known for chasing the best investment and loan rates regardless of the bank, credit union or investment firm.  If this sounds like you, realize you are doing yourself a disservice. You are not simplifying your life; doing this only complicates it. 

Choosing investments in isolation does not allow the advisor who is working with you to do their best on your behalf. You need an advisor who completely knows and understands your goals, dreams, and aspirations. To willy-nilly entrust your investments with different advisors is gambling with your future. With no deliberate action plan, you have no assurance of achieving your goals. 

The benefit of having one advisor is that it allows him to see your whole financial picture. As you build your wealth, you require assistance in arranging your investments according to your risk tolerance and time horizons.   What you might not realize is you are also building leveraging power.  When you deal exclusively with one financial institution, you may negotiate a preferred rate for your guaranteed investments and loans.  The deeper your relationship is with your financial institution, the stronger their commitment is to serve you and meet your needs.   

During your retirement years, when it’s time to layer your retirement income, having one advisor makes the most sense.   You need someone who structures your mutual fund investments to create a “cash wedge” to fund your lifestyle. 

Once withdrawals begin from your RRIF (Registered Retirement Income Fund), funds should be withdrawn from only one registered plan (or an oil well, as I call it.)  Imagine the dilemma of having RRSPs (Registered Retirement Savings Plans) with various financial institutions. At the mandatory age of 71, you are required to convert these investments to a RRIF.  You are then obligated to withdraw the minimum amount annually from each registered plan. Little trickles of cash flowing from different plans is a haphazard way of handling your investments.

If you are solely a GIC (Guaranteed Investment Certificate) investor, over the years you’ve made the effort to effectively ladder your investments to capture interest rates over different terms. The most appropriate and logical strategy is then to withdraw from the retirement investments with the lowest interest rate.  A banking system is designed to do this and can only occur if the investments are held with the same financial institution.

Another important reason for having all your investments with one advisor is to simplify your estate for your executor.  Can you imagine the confusion your executor faces if your dealings are held at different financial institutions?  Investments may even be overlooked simply because your executor is unaware of your dealings. 

Another point is a matter of convenience. Seeing all your investments appear on one consolidated statement helps you to see the whole financial picture. Gauging your progress will be easier to monitor.  

I use my personal experience to help you understand that multiple advisors don’t work in your favor.  A contentious issue is conflicting advice from different sources. Have you ever asked someone their opinion about the vehicle you should buy, about which restaurant is the best, or which direction to take in your career? If you ask ten different people, you most likely will receive ten different responses. You may be more confused than if you never asked.  Put yourself in the same position with different financial advisors.  Can someone who doesn’t know your story provide you with the best advice? So again, I say to you, “Don’t’ just listen to me.”  Daryl Diamond, an advisor, author, and educator on the subject of retirement planning, witnesses the confusion conflicting advice causes.  Read his views in the article, Conflicting Advice – and How to Avoid It.

You’ve been handed a serving of pros and cons about having one advisor versus multiple advisors.  What will be your decision?  Will you reap the benefits that your “one go-to-person” has to offer? The choice will always be yours to make. Like I said, you don’t you have to listen to anything I say, nevertheless, I secretly hope you do.   My intentions are to always steer you in the right direction.

Thursday, September 10, 2015

How Did We Get It Wrong?

Do you know you have a communication style?  You may even have more than one.  With different people, you may be selective.  What I find amazing is, as children, we learn to talk starting with simple words, learning our ABC’s, and forming short sentences.  Along the path, our use of language is modeled after the significant people in our lives: parents, teachers, friends, and co-workers. We may never have been taught the appropriate way to communicate.  How do we get communication “so wrong” that we have to re-learn “how to talk”?

Do you remember an unpleasant incident when someone said something to you that’s embedded in your memory forever?  I remember being told, “You ever do that again, I’ll break your fingers.”  Now, flip your memory to a time when you said something you wish you never had.  Regretfully, I know I have.  My words pierced the heart of someone when I sarcastically criticized him for being like his father.  Ouch!

Communication is something we do every day. Our words either build people up or tear them down. Our words can lead to meaningful conversations or cause silence.  Whoever we associate with daily, can either respond negatively or positively to what we have to say.  Like me, we go through the normal course of our day, doing things the way we always have.  Listening and speaking contribute to a communication style we are unaware we have. Like you prefer a specific style of vehicle, you may prefer a specific communication style that is “Assertive”.  As Claire Newton explains in her article, The Five Communication Styles, surprisingly the assertive style is used the least. Her meaning for assertive is respecting yourself and other people.  It is the ability to clearly express your thoughts and feelings through open honest and direct communication.

Claire Newton describes in detail the different behaviour and language associated with her list of five: Assertive, Aggressive, Passive-Aggressive, Submissive, and Manipulative. Identifying yourself and others with a particular communication style may be a thought-provoking exercise. To learn more, click here.  

When you comb the Internet, you will be surprised to see the amount of information dedicated to communication styles.  What does this tell you? I would say understanding the way we communicate is important “stuff”.  Communication styles help people identify themselves and others so they communicate effectively.  Look at the various titles in each group. Which one are you?

q  Driver, Expressive, Analytic, Amiable

q  Action, Process, People, Idea

q  Relator, Socializer, Thinker, Director

q  Doers, Thinkers, Influencers, Connectors

Sharing this information contributes to understanding your family’s make-up.   When discussing money matters, we keep getting back to the development of an important habit shared by Dr. Steven R. Covey:  “Seek first to understand, then to be understood.” The better (and more) you can understand the way others think, communicate, and react, the more successful your relationships will be. When discussing money issues about saving and spending, how effectively do you communicate your reasons?  If goals, dreams and aspirations are not shared effectively in meaningful conversations, then pinpoint whether a specific communication style is the road block.

The place to start is with awareness. The following excerpt from Iyanla Vanzant’s book, One Day My Soul Opened Up, struck a chord with me. Probably the reason I have been so smitten by her rationale was because I could see myself in her story. 

A teacher once told me, “If one person says you are a horse, you don’t have to listen.  If two people say you are a horse, you probably need to pay a bit more attention to what you are doing.  If three people say you are a horse, more than likely you have hay hanging out of your mouth and a saddle on your back!” In other words, people looking at you can see things that you may not be aware of. Very often we are unwilling or unable to discuss with one another the unpleasant aspects of ourselves.  Rather than discuss what we feel, we criticize one another.  People always told me I looked angry.  When they were saying I looked angry, they were saying that I was defensive and combative. Whenever these things were said to me, I would become offended and would go into a long tirade about people not knowing me, what I thought, or what I felt.  I usually ended my little speech by saying how sick and tired I was of being criticized, and that I was not angry, damn it!
When you refuse to pay attention to what life is saying to you, life will make its point very clear.  Life wants us to be aware of ourselves so we can make the necessary adjustments in order to live more harmoniously.  Life was trying to make me aware that I was acting like a horse, but I kept insisting that I was a kitten.  

At some point in our lives, we need a wake-up call. Awareness is the key to understanding your relationships with different people. I am not a psychologist; I am a financial planner. But it doesn’t take a genius to see that relationships break down because people do not communicate effectively. 

What’s the solution?  Walking with blinders, pointing a finger at someone else, and complaining he doesn’t understand your motives, isn’t the solution. Perhaps a practical one is to be aware of the personalities and communication styles of others.  If you are unsure about your own, ask someone to give their honest opinion or search for an on-line quiz which will provide the answer.  Learning what makes other people tick, including yourself, is a step in the right direction to “get it right”.  

Thursday, September 3, 2015

What Colours “Build” You?

“You have to get along with people, but you also have to recognize that the strength of a team is different for people with different perspectives and different personalities.” — Steve Case 

Anyone who works with farm machinery understands the importance of gears working together to cause movement. The cogs (or the teeth) have to line up to network with other gears. This principle also applies to the farm family business. Understanding the role each person plays is the essence of a successful business.  If you are not communicating with each other, working together to move your farm in a profitable direction, then your business is not working as effectively as it can.  Each person involved in the farm operation is like a gear which has an important role to fill. When communication bearings are worn, gears spark, igniting a fire.   When machinery parts are not working, then the equipment manual is required to understand how to fix any glitches or problems. Let today’s information serve as your manual.    

Permit me to switch gears. What we see on the outside of a person is visible ~~ eye colour, hair colour, and skin tone. What we don’t see are the colours on the inside which are invisible ~~ the colours of a person’s personality or temperament.   The Personality Dimensions® program is designed to help people understand their behavioral patterns with the use of four descriptive personality colours: Inquiring Green, Authentic Blue, Resourceful Orange, and Organized Gold.  If your curiosity has been piqued, you can learn more about the colours here.

Each person is different for a reason. When we work in conjunction with others, we help them fulfill their life’s purpose. Zig Ziglar said, “You can have everything in life you want, if you will just help other people get what they want.”  I believe this to be true.  To have successful relationships, the secret ingredient begins by understanding each other.  When you recognize other’s strengths and weaknesses, you will not only understand but appreciate their qualities.  Where they have weaknesses, you complement them with your strengths. 

A farm business is similar to any work environment – an office, construction site, or factory – people come together to “get the job done” and “to get paid for the work”.  Here’s the core of the matter: matching the right person to specific tasks makes “the team” work effectively.  Each member’s personality contributes to the family’s accomplishments.  By understanding yourself first, you open the door to understanding others.  Since you are less likely to be receptive to people who want to change you, the same is true about people you want to change. They will resist your attempts. 

Farm succession planning also is met with resistance when personalities clash rather than complement each other.  Quite simply, everybody may share the same vision and expect similar results but they see getting the results differently.  Ernesto Sirolli speaks about the ingredients for a successful business in his TED Talk, Listen and Shut Up.  The three areas in business, which he refers to as the “Management Trinity”, are: producing the goods or services for sale (which is the labour component), marketing the product, and managing the finances. One person is generally skilled in two of the three areas.  Being mindful of each family member’s skills will determine who should be responsible for each area. In his book, Ripples from the Zambezi, Mr. Sirolli contemplates the fact that personalities likely are a major influence to the work people love doing.

Personally, I have never met anyone who could produce the product, market it, and manage the finances of the business. Plenty of people try to do it, many do it badly, but nobody I have ever met has been equally passionate and proficient in all three areas.

Often a client will be talented in producing and selling the product, or in producing and organizing the financial bookkeeping. What is very rare is to find someone who is equally passionate about marketing and bookkeeping.

Could it be that we only excel at doing what we love?  Could it be that marketing and financial management requires different personalities?  Extroverts and introverts? Even discounting psychology, we know that one thing is very clear:  successful businesses are always a team effort.  Whether it is a husband-and-wife team or a corporate structure, successful businesses are built around peoples’ skills.

The heart of the matter is once you see people’s personalities as colours, you will learn and understand people are created with multiple colours, one being more dominant than the others. The amazing truth is the colour mixture is different for each individual.  What I liked about the Personality Dimensions® workshops is being aware of the colours built into individuals. Just like you can build things with blocks of coloured Lego, the people in our lives are pre-built with coloured blocks.  If we want to learn more about them, then we have to learn their colour scheme.  Although you might not be able to attend an intense Personality Dimension® Workshop, you could set aside ten minutes to take an on-line personality test to learn about your strengths, personal relationships and the career path.  If you are interested, click here.

Before scheduling a farm succession plan meeting, you might want to look at your family dynamics to determine how effectively you work together.  Do you understand each other’s personalities and how these are in direct correlation to their involvement in the farm business?  Once you do, then the task of grinding out the details will be easier.  The resources presented in this blog are to provide tools to have the tough conversations. They are the mechanisms to “get the job done”.