Today I am going to talk about an area of focus that is lacking from the investment industry, which you will see in a moment how beneficial this can be for just about everyone from the severely broke to the multi-millionaires.
This area of focus is:
How to confront money.
Confront has two common definitions:
In this article, we are using the second definition. To elaborate further on this:
Over my years as a financial planner, I have found that clients who are willing to confront money tend to do better financially. For example:
In other words, there seems to be little downside to increase the ability to confront money.
How to increase our ability to confront money
It is not always easy to confront money as we often have reasons and justification of why we can’t confront the issues or we are waiting for other people to do their bits until we do our bits. This is where financial planning can help; a good financial planner can help you work towards your financial goals, just like a personal trainer who can help you work towards your physical goals.
What is financial planning?
Financial planning is not about selling shares and insurance.
Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include simple ones such as buying a home or an investment property, saving for your children’s education, to more complicated ones such as planning for retirement or achieving financial freedom.
A financial planner is someone who uses the financial planning process to help you figure out how to meet your life goals.
Financial planners are similar to GPs in the medical fields; they work with other specialists financial advisors such as a mortgage, tax and real estate professionals. Without the big picture outlined by a financial planner, property investors often find conflicting and confusing advice from different specialist advisors who are mainly trained within their own areas.
The outcome is no different from a patient trying to book himself in to see a specialist without waiting for a proper recommendation from a GP. We all know specialists get paid for their part of the effort regardless of whether it benefits the whole.
Hence property investors often find themselves in one of the following common situations:
The approach a financial planner would take differently is that they will ask you what your overall goal is before sending you off to the specialist advisors. For example, a financial planner may find out the big picture such as what passive net income you want to achieve from your investment within what time frame, define a step by step approach through a financial planning process before recommending you to work with the specialist advisors.
What we do at Investors Direct Financial Planning
After working with thousands of property investors directly for almost a decade, my colleague Bill Zheng, the founder of Investors Direct, had realized that there was a critical component missing from Australian residential property investors which have greatly reduced their chance to succeed financially.
The missing component is financial planning that is 100% dedicated to the needs of property investors, as most property investors do not have a clearly defined financial goal backed by a workable plan.
Bill invited me to start up the financial planning division for Investors Direct a couple of years ago, and I happened to be one of the few financial planners who are very interested in properties and shared the same investment philosophy of Investors Direct.
My mandate as the director of Investors Direct Financial Planning is to help our property investor clients to set up their financial objectives with workable plans and assist them persistently towards their financial freedom.