4 Mistakes to Avoid

Many people make mistakes when choosing and working with their planners. These mistakes are as common with Average Singaporeans as they are with Affluent Singaporeans. However, these mistakes seldom occur with the Savvy people. I know this because many savvy people have effectively built their fortunes and protected their assets by building with the right planner. There are five pitfalls of choosing and working with planners on your financial plans.

The five pitfalls are:

1. "If it ain't broke, don't fix it."
2. Never getting a second opinion.
3. Hiring yes-man and women.
4. Not accepting that complexity requires outside experts.

Pitfall #1: "If it Ain't Broke, Don't Fix it"

Just because you have worked with the same planner for 10 or 20 years does not mean you should continue to do so indefinitely. If you applied that logic to medicine, you would still see your pediatrician long after you turned 18 years old. There is a high likelihood that, as you have accumulated wealth, your needs have changed. Though your planner was there for you when you have simpler needs, you are not required to stay with that advisor when you have outgrown the planner's or firm's capabilities and expertise.

When you consider the typical pattern, this is not surprising. People choose their planners when they are just starting out. People may need some life or disability insurance, or critical illness insurance. Working long hours and without the means to evaluate a planner, they typically do what other busy people do and take the path of least resistance. They use the planner their parents use.

Though this unscientific approach is obviously flawed, it serves its purpose when there are bigger challenges at hand (like 20-hour work days). When life is so hectic people feel they just need to make a decision quickly. Often the only criteria people use when choosing their first planner is competency and affordability. Like triage nurses in an emergency room, they do not have to be top-trained specialists when all that is needed are some basic stitches. This approach is quite understandable.

What is so alarming to us is not this initial choice of planner, but the fact that most clients stay with the same planners who handled their initial financial planning for the rest of their careers. The typical justification for this is rarely anything concrete or acceptable. Answers like, "We have been together so long, I'd hate to change now," or "If it ain't broke, don't fix it," are unpersuasive. Further, this begs the questions: "How do you know it ain't broke if you don't get a second opinion?"

Most alarming is when a person stays with a planner when the person has clearly outgrown the expertise of the planner.

Pitfall #2: Never Getting a Second Opinion

A good way to grade your existing planners and test the competencies is to get a second opinion. Good planners are busy helping clients like you.

Of the flaws discussed here, never getting a second opinion is the most damaging. Unfortunately, it is also the most common. it is most damaging because a second opinion is the primary way of identifying planning mistakes or noticeable omissions from your planning.

Just as good physicians encourage patients to get second opinions, good planners should encourage their clients to do the same. This is the only way for you to adequately judge a planner's performance. If your life were in jeopardy, wouldn't you get a second opinion? Isn't your financial life important as well?

Pitfall #3: Hiring Yes-Men and Women

Find experts, don't look for yes-man and hire people smarter than you are. The very successful ones realize that they can't be experts at everything. Some rightfully believe that they could focus on finance and probably be just as skillfull as some of their planner. They also realize that it would take many years to achieve that level of expertise. To leverage their time, they choose to hire experts to work for them.

Are you having enough of yes-man in your live. Interestingly, some people cherish the moments when planners stand up to them and challenge their position or question their decisions. They see this as an opportunity to improce their position. Some even enjoy the challenge.

Pitfall #4: Not Accepting that Complexity Requires Outside Experts

If you needed a stent put in your aortic valve, you would not go to a general practitioner. Moreover, you would not consult with any specialists outside of cardiology. In fact, you would not even settle for seeing a regular cardiologist. You would seek the help of an interventional cardiologist to handle this procedure. The point is that medicine is highly specialized. If you have a specific issue, you want a physician properly trained and experienced with that particular issue.

Seeking a specialist to help you with your health concerns may be obvious. However, people completely ignore this lesson in the area of finance.