The Five C’s We Expect From Our Advisors

Have you fretted over an unpredictable situation?  My anxiety increases when I have to face my fears and need to be honest with my family, friends, and sometimes clients.  I am concerned our relationship may be jeopardized.  Perhaps you face the same dilemma. 

When someone has a problem or a concern, they may ask for our advice.  We realize our answer might not be one they want to hear.  Potentially they may be upset that we even suggested such a preposterous solution. 

 

Take this situation from a different angle. Imagine a tough conversation with your advisor about budgeting, succession planning, or a major real estate purchase. You need financial direction. Because of your solid relationship, whatever advice your advisor offers, you would certainly consider. You wouldn’t expect your advisor to be shaking in their boots afraid of your response. After all, you are counting on their expertise to help you analyze the best option.  However, you have to evaluate their qualifications and it’s acceptable to do so.

My top five C’s are intermingled with a few minor C’s.  Feel free to pick through the entire list of attributes. 

  

Competent

Because our advisors possess the professional knowledge, we trust their judgment. We simply cannot know all the fine details about a specific topic. Take tax planning as an example. The Income Tax Act is complicated to understand.  Not all the pieces of the tax legislation apply to everyone; however, we still need to filter through the pieces pertaining to our unique situations.

Whether it’s tax planning, legal advice, or insurance analysis, we are presented with many possibilities which make our final decision more onerous. Choosing what is in our best interest needs to be interpreted by a professional   This leads us to the next skill our professional advisor must possess.

Communicators

Because our advisor communicates effectively, we recognize the reasons behind their recommendations. They talk at our level of understanding. Quite often the industry’s jargon will fly over our heads so any strategies must be explained in easy-to-understand language. Logic dictates that if we don’t understand the plan, we won’t understand the benefits. Communication is a two-way street.  Our professional advisor may possess all the textbook knowledge but the real skill is delivering the information so we get it.

Imagine your accountant saying, “We need to complete the Section 85 Rollover Form” versus “We need to complete the Do-Not-Tax-Me Form”. Notice the walls of the language barrier self-destruct. When our advisor takes down any language barriers, they are building trust in our relationship.  We automatically feel an ownership in the strategy because they communicated their reasons effectively.   

Candid

Because our advisor is candid, we can trust and believe their advice is in our best interest. As our relationship continues to build, we develop a strong connection.  This ideal chemistry allows our minds to be opened to tough conversations when we are told something with sincere honesty that our way isn’t foolproof.

   

     “That vehicle loan you think you need will financially drag you down. The debt servicing  calculation shows where you stand.” 

        

This takes us to the next quality we should expect from our advisor.

Courageous

Because our advisor is undeniably confident, we can expect them to be fearlessly courageous with us.  Sitting on the other side of the desk in their office or around our kitchen table, we should expect our advisors to be courageously upfront with us even though we may not initially appreciate what they have to say. 

     “It’s going to cost us how much?”

     “You are telling me this is what can happen if I don’t do that?” 

Certainly, the expectation is there’ll be some objections (or pushback) when an idea is first presented.  But here’s the reality, we don’t need someone to appease us.  When they understand our situation and have the courage to tell us, then we are given the right information to make a wise choice.  We don’t have to like what they are saying to understand what they are saying is for our benefit.   

For any business, the two most difficult topics are succession and estate planning.  When business decisions impact an entire family, that’s a different ball game than selling a business and retiring with the sale proceeds.  This is when we expect our advisors to step up to the plate and help create a financial plan for a family business.  

Committed

Because our advisor is 100% committed to us, we feel confident in our decisions.  They presented all the facts, they completed their homework, they developed potential solutions, they explained the benefits and consequences of actions.  They have given their all (skills, knowledge, and expertise). When they hand in the assignment we have given them, then we can grade them on their performance based on our satisfaction. Most likely, they achieve a high mark because of their commitment to us.  When we are at peace with their advice, we can rest knowing our affairs are in order.

It’s a known fact that people in any sales industry (banking, insurance, dealerships, investments, etc.) have sales targets. Advisors who put our interests before their own earn our respect.  Our appreciation grows for the advisor who sets aside the target in the interest of doing what’s best for us.  Knowing our needs matter tells us our advisor is completely committed to doing their best for us. 

Togetherness

The next time you pick up a coin, pay attention to both sides.  You would agree neither side contributes more to its value.  The value is determined in unison. This truth applies to the relationship between our advisors and us.  The value of our joint relationship determines our success in our personal, financial, and business lives.   Neither of us (the advisor or client) should fear honesty because we are afraid of jeopardizing the relationship.  (In fact, the opposite could happen when we are not truthful. Our relationship may be compromised.)

When intentions are sincere and the advice is solid, the outcome will always be positive.  Great advice is directed to help and not harm us.  Regardless whether you are the taker or deliverer of advice, your relationship is built on a foundation of trust and respect and no one should have anything to fear. 

Paying Attention to Our Reflectors

The reflectors on farm equipment provide better visibility when machinery is travelling on roads at night.  That’s a fact. Everyone wants to be made aware of the potential danger.  Without these important safety devices we may not see what lies ahead of us when we travel. 

When I spotted the reflectors on the air drill, my mind drifted to the reflectors in our lives.  Our professional advisors prepare us for the dangers we could encounter when we don’t pay attention to potential hazards.  They know the damage certain incidents would cause to our livelihoods and businesses.

Strong relationships are built on trust and honesty. Any recommendations from an advisor should be welcomed, encouraged, and assessed.  We would never want a member of our team to be anything less than honest because they are afraid of our reaction. 

Sometimes, personalities are known to clash. Some advisors willingly take the heat from their clients for their opinions. Both know that an honest opinion is part of being highly respected and valued.  As professionals they willingly take the risk.  They may witness similar situations with adverse consequences when the appropriate action is not taken. Initially, the truth may not be well received.  The conversation may revolve around taking on more debt than we are capable of financially managing, procrastinating about writing our wills, making time to put insurance in place before something happens to us, or pointing out the fact we are overspending.  Many critical and dire situations require hand holding and a firm I’m-saying-this-is-important so take my recommendations seriously. 

Are you aware of the reflectors in your life?  Do your consultants willingly straight-out tell you the truth, point out the potential dangers, and hold nothing back? 

Simply taking control of our situation ensures we control the outcome. We flippantly say we can’t control everything but we certainly can control the important matters.  

Think of your most trusted and valued advisors and assess your relationships.  Do you listen and follow their advice or do you tend to brush it off and say, “We’ll get to it someday”? 

Perhaps we need to create a “Someday List” so we don’t forget these promises to ourselves, family and advisors. The important condition attached to our “Someday” list is the need for a deadline so “it” gets done.  Misleading ourselves, or for that matter misleading others, is a dangerous strategy; something important, like drafting or revising a will, cannot be postponed indefinitely.

Time passes quicker than we realize.  Soon another year has lapsed; five, ten, maybe twenty years later, things on the list have been not addressed. We laugh when our wills still have guardians for our thirty-something-year-old children. Quite often the reason is a “scheduling” problem.  We don’t pencil these essential appointments in our calendar.  

When other fleeting activities derail our best intentions, here’s where we must become intentional.  We have to turn our “Someday” into sooner rather later. Next week! This month! Assign a date and a time to your “someday” tasks.

So let’s pay attention to the reflectors in our lives. They’re visible for good reason.

Preserve the Knowledge of Others

The CAFA (Canadian Association of Farm Advisors) Parkland Chapter ended their membership year in late June on a high note. The meeting’s theme was “Why Advisors are Valuable to Farm Families.” Our presenters, ranchers and farmers, shared their first-hand experiences working with advisors on their businesses. 

Robert and Karen Ivey, partners in Evergreen Cattle Company, and Terry Aberhart, CEO of Aberhart Farms and Sure Growth Technologies and Managing Partner with Aberhart Ag Solutions, graciously shared their knowledge, experience, and wisdom.  Their insights are worth capturing and preserving in writing so that others may learn from their journeys. Here are a few take-aways from their presentations.

1. Have a keen interest and passion – important ingredients to drive success.  This sound advice may have been reiterated previously by different people as they pursed their careers.  Today, our presenters confirmed this again.  If your heart is not in the work you do – whatever it may be – then no matter how hard you try, you will not drive yourself to do better than average.  Your passion causes you to lie awake at night, dream about your work, and devise strategies. Living and breathing what you know and love becomes part of your DNA.  The fuel -- your interest, passion, and dedication to your work -- are the driving forces of your mission and vision statements. This takes us to the next point.  

Robert and Karen Ivey
Evergreen Cattle Company

2. Create and review your mission and vision statements for your business.   A person does not realize the value of words. A well-designed and crafted mission and vision statement motivates people to succeed especially through setbacks.  Failures, obstacles, and challenges will happen.  Our determination to see the light at the end of the dark tunnel helps us to persevere through the tough times.  Robert and Karen designed their mission statement four decades ago when they first began farming.  This important step should not be overlooked.  The vision statement tells you where you want to be (and what you represent) and the mission statement tells you how you’ll get there.  

Terry Aberhart
Aberhart Farms / Sure Growth Technologies
Aberhart Ag Solutions

3. Embrace change.  Change occurs with or without your permission.  New ways of doing things -- technology, processes in a business operation,legislation (legal and tax rules) – affect a business.  You cannot control everything so you need to focus on the things you can control.  “Have the right mindset and work with future-minded people,” was Terry’s advice.

4. Anticipate the storms, the financial setbacks. You may need to rely on a different strategy.  In the farming industry, severe weather conditions and disease infestations can hamper the bottom line.  Regroup. Strategize. Persevere. Rely on your mission and vision statements.

5. Know your financial situation. If you are not a number person then linking up with an advisor who can help establish your yearly budgets and analyze the financial data is vital. The Management Trinity has been previously discussed. Generally, people are good at two of the three essentials necessary to carry on a business. These three are finances, marketing, and the hands-on work. Business plans with realistic financial projections are road maps.  Robert and Karen had created their business plan with financial projections and asked their banker, “Do you want to come into business with us?”  They proved to their business advisors their capability for achieving their business goals with a concrete plan.    

6. Engage with other advisors.  Advisors help you think and plan realistically.  Terry said it best, “You may be blinded by what sounds like a good idea until someone shoots holes in your boat for good reason.” Advisors fill in the gaps with their knowledge and expertise then advise accordingly.

7.  Find a way which works for you.  “Canned programs” with a step-by-step process do not work for every business family.  Two examples are whether to implement an estate freeze or purchase land inside a corporation.   The strategy has to be right for you.

8.  Keep your business and family affairs separate.  Treat your business as “business first” which results in doing what is in the best interest for the business. The Three-Circle Model illustrates that the family business has three unique groups within its structure: the owners (or shareholders), the family, and the business.  

To operate a farm or ranch successfully, like any business, you must have a great understanding of all the elements.  Our presenters shared the core foundation for any successful business remains unchanged in order to strive, thrive, and survive. 

Reflecting on the years when our ancestors first came to Canada, you can see how agriculture has evolved over the years. Breaking new land was first done with horses and plows. Roots were handpicked.  Labour was intense and backbreaking. Today caterpillars and heavy discs relieve the strenuous labour.  Yet others stressors, which are uncontrollable, remain constant. Weather is one factor.

The benefit of learning from others is hearing about their strengths, weaknesses, opportunities and threats.  Naturally, a person thinks others have it so good until we hear how bad they had it. But their ability to turn their situation into good is reassuring and encouraging.  Advisors and mentors help us find the way.

An Everlasting Impression

 

 

 

Ronald Read’s Story

Until Ronald Read made the headlines in early February, most did not know of him. From multiple articles, we learn Ronald Read was an “unbelievably frugal” man with a generous heart.  He led a modest life, working with his brother as a mechanic for 25 years.  After the garage was sold, he took a part-time job as a janitor for JC Penny for 17 years.  Mr. Read was born in the small town of Dummerston, Vermont, in 1921.  Like many stories we hear today from parents and grandparents, he, too, had to walk to school, a distance of four miles from his home, to obtain an education.    He was the only member of his family to graduate from high school.  After his military service in World War II, he contently returned to his hometown where he took up his occupation as a mechanic.  In 1960 Ronald married Barbara March, a mother of two children.   Barbara passed away in 1970; Ronald remained a widower until his passing in June, 2014, at the age of 92.     

People may not have paid much attention to him or his activities but one thing is for certain, he did something well.  He was an astute student.  His textbook on investing was the Wall Street Journal.  His vocation went beyond his menial tasks as a mechanic and janitor; he had a knack for picking rock-solid, dividend-paying stocks which rewarded him royally over the years.  He had the foresight to stay on course.  He stayed invested and kept on investing.  Mr. Read may have never read the book, “Automatic Millionaire” by David Bach, yet he put into practice the steps which not only made him a millionaire but a multi-millionaire. 

The heart-warming part of his story is the generosity he showered upon his community, the beneficiaries of his treasure.   From his accumulated wealth, Ronald Read bequeathed $4.8 million to the Brattleboro Memorial Hospital and $1.2 million to the town’s Brooks Memorial Library.  

After Mr. Read’s story was released to the public, many questioned how he obtained such wealth on a modest income.  As of last count, 319 comments appeared under CNBC’s storyline, Here’s how a janitor amassed an $8M fortune.  The quest for an answer began with an examination of his lifestyle.

Lessons Learned from Ronald Read

Surely, if Mr. Read faithfully read the Wall Street Journal, as many people attested he did, he no doubt heeded the advice from Warren Buffett, world’s most successful investor and wealthiest person.  Mr. Read may have digested words of wisdom about investing from this well-known guru and teacher. One such message, “Never invest in a business you can’t understand” attests to his choice of investments in AT&T, Bank of America, CVS, Deere, GE and General Motors.  Regardless, whatever investment advice Mr. Read gleaned from the Wall Street Journal’s teachers, he demonstrated their advice was rock-solid.

There’s a lesson in everyone’s story.  In an interview with Chris Horgan, a strategist with Ramsey Solutions, Chris delivered a message to both investor and advisor.  

·         For the investor, your part is “to identify how much you want to save and how much you want to give away, then figure out how to get there with the help of an investment professional.”

·         For advisors, you need to be “someone who has the heart of a teacher and not someone trying to sell stuff.”

Chris Horgan’s closing comment clinched the importance of investing. "It can be done. In America we need to start believing back in the American dream and stop buying the stuff that's on commercials."   The word, dream, is key.  We are so easily swayed by things we don’t want or need that we lose sight of things that we do.  We simply stop dreaming because things appear unattainable. Regardless of the amount of a person’s salary, we can achieve the dream if we are determined to put effort into working and saving. We have Ronald Read as a role model who clearly confirmed that acquiring wealth is possible.

Everlasting Impression

Mr. Read’s fascinating story left a number of impressions. I wasn’t sure which one made the greatest impact: 

·         His ability to save and invest

(or)

·         His ability to be unselfish and put the needs of others before his own.

Then I decided I did not have to choose, I can accept the fact all these points made an everlasting impression.

You, too, will draw your own conclusions from Mr. Read’s story.  When I think of making “an everlasting impression,” I will think of Mr. Read.  Although he didn’t make his fortune from owning a multi-billion dollar corporation, he did own pieces of multiple companies by buying their stocks.   He applied the slow-and-steady, invest-in-what-you-know investment strategy which led to the accumulation of wealth.  In the end, his family and community benefited by his generous donations because of his choice of life and investment styles.