Growth is about a whole life process of getting better information, having the perspective and guidance to manage that information, and making proactive decisions accordingly.
Too often, in finance the word “grow” is exclusively applied to investment performance. While no advisor worth his or her salt would tell you that investment performance matters, I think you need to think about growth more broadly. Our best clients here at Trilogy don’t just seek to grow their balance sheets, they seek to grow their skills, their knowledge and their habits. Growth, then, is about a whole life process of getting better information, having the perspective and guidance to manage that information, and making proactive decisions accordingly.
I believe people who seek to grow this way can have a huge impact on their finances. Here are six key steps we’ll be covering this month to help you Know and Grow Financially:
- COMMIT TO GROW: Financial independence is about the long game. It’s a 1000 good decisions in one direction. A growth mindset is able to ignore or minimize short-term challenges and distractions by focusing on the goal and knowing that personal growth—which we define as making better decisions over time—is essential to long-term success. Too many people think the markets exclusively determine financial success, but it simply isn’t so. Many investors let their emotions get the best of them, undermining their long-term strategy.
- KNOW YOUR GOAL: It’s time to get objective about goal-setting. Lewis Carroll said it best, “Any road can get you there, as long as you don’t know where you are going.” You’ve got to make your goals measurable. How much? By when? “I want to retire someday,” is not a goal. “I’m going to resign on October 1, 2025,” is a goal.
- ELIMINATE DISTRACTION: Goals are driven first by bedrock priorities. What’s important to you? Family? Time to relax? Travel? Investing in your children and grandchildren’s futures? Leaving a legacy? It’s hard to commit to goals if you don’t know what gets you out of bed in the morning. Too many people have lists of dozens of goals floating around their head. The exciting new book, Grit, talks about a strategy by Warren Buffet where he says to write down all your goals and then intentionally eliminate all but 5. The job isn’t to focus on the five, it’s to focus on ignoring the 25 you eliminated.
- CONSOLIDATE DATA:A financial strategy should measure the feasibility of success. Given various market environments, what are the probabilities of success? To have that level of data analysis requires you to have technology and tools (like the ones we use at Trilogy) to put all your financial data in one place, and then use mathematical modeling like Monte Carlo analysis to see the potential effects of your decision-making. No technology can tell you the future, and past performance is no guarantee of future results, but putting all that knowledge in one place can help you make your next decision.
- PICK A FIDUCIARY:A fiduciary is an advisor who is contractually required to act in your best interests. While our goal today isn’t to focus on the legal distinction, we instead want to focus on the intent of a fiduciary. We call it the “same-side-of-the-table” advisor. And it’s a role we’re really serious at Trilogy. It means a financial services partner whose whole job is advice and representing you, not representing someone else. Knowing how your advisor gets paid, what their service model is, and if there are other interests they represent besides yours can be critical to getting good advice.
- MEASURE AND ADJUST:There’s no shortage of advice about annually rebalancing your portfolio or making adjustments to your investments based on macro-economic conditions. You know what we don’t hear enough of? Advice on measuring and adjusting your financial DECISIONS. You and I both know that life throws curve balls and changes: two kids become three, a job change takes 18 months, a health scare blasts through our emergency fund. For all these reasons, regular measurement of our financial decision-making and recalibrating to new life demands is critical to long-term growth.
In 25 years of advising clients, I’ve learned that it's often the soft stuff that matters most: how we handle a crisis, dealing with fear in turbulent times, knowing which information to act on and which to ignore. While so many financial professionals want you to make decisions based on decimal points and product features, we here at Trilogy believe that your best future requires your best you. And to get here from here for most people requires a little knowing and growing.