“The Truth” About Why Financial Advisors Aren’t Going Away (Part 1)
Financial Planning, Edelman-Style: A Comprehensive How-to Guide
In January of this year, at a conference Main Street has never heard of, a showdown of sorts occurred between Andy Nash (see footnote), Wealthfront’s new CEO, and Ric Edelman, founder of his eponymous firm, Edelman Financial, and also a popular financial talk show host. The two were on stage as a “Rumble in the Jungle” face-off between the new and the old world of money management. The question attendees — mostly financial advisors — came to hear was whether today’s smart software can replace a human’s touch in money management. Verdict — unlikely.
Curious about all the hub-hub — admittedly a tempest in a teapot for most — I picked up Edelman’s book, “The Truth About Money.” Edelman’s reputation as a leading figure in the financial advisor community is legendary, a rags to riches story through financial discipline and marketing of his lessons. While I was only remotely familiar with his firm, over the years I have pursued my own self-study of investing, reading the pedestrian “Mutual Funds for Dummies” to the more arcane “Security Analysis on Wall Street” and “A Random Walk Down Wall Street,” plus dozens more. And in brief, what one discovers is the technical elements are fairly well documented, if not always successfully applied by the financial services industry (Exhibit A — hedge fund returns).
Edelman’s message, subtle in its own way, speaks to the financial world inhabited by Main Street. His book essentially says: Life is simple and not simple — here and there and way out over there, are financial gotchas that can wreak havoc with your long-term success. So many are the ways we can trip ourselves up I was often reminded of a common expression amongst my former Carlyle colleagues — “the deals you don’t do matter as much as the deals you do.”
To underscore, below are a handful of the topics Edelman describes in surprisingly consumable style:
1. Stocks, bonds, mutual funds, government debt and more, plus when and why
2. How fund expenses, including the fixed ones disclosed to you and the variable ones that are not (often buried in the Statement of Additional Information), are critical to building a retirement nest egg
3. The ins and outs of life insurance products, including how to choose between agent and broker
4. Saving for college, 529’s versus pre-paid tuition plans
5. Mortgages and why the 30 year fixed should be your go to
6. Doing your taxes, and when to hire out
7. Disability insurance, when and why to sign up
8. Long term care insurance and how to avoid losing your home in retirement
9. Umbrella insurance to protect your wealth
10. Wills, probate and responsibly transferring your wealth to your heirs
Whew.
And this is an abbreviated list.
Part 2 here.
