I have met with many individual Minnesota investors who have invested thousands of dollars in a financial plan.
It is easy for me to throw stones at financial plans. I don’t have the education and the training to create such a document. I am not an expert in tax law, estate law, insurance law, or financial planning. There is not a long list of letters after my name on my business card.
I do know how to make the best choices among a group of stock and bond market options. And I know how to manage the stock and bond market risk of those choices.
I have never figure out how anyone can predict the future based on a limited set of information at any one time. That is exactly what financial professionals attempt to do with a financial plan.
I read all the time about business plans. And I also read about the fact that the time spent on making a business plan would be better spent on asking customers what could be improved in the product that the business provides.
I have learned in my 30 years of providing investment advice to individual investors that you can’t predict anything with 100 percent accuracy. Every single element of planning a financial future is constantly changing.
Individual investors will encounter obstacles in their financial plans that can’t be predicted. Someone dies, someone is born, someone marries, someone graduates, someone losses a job, and someone divorces. The list goes on and on.
And that goes for one person if the family. Add to that spouses, kids, and parents.
The only way that an individual investor can account for every possible financial event in their life is to have the ability to adapt to the life changes that come.
Financial plans don’t imitate life. They never will.
It is good to have a plan in anything that you try to accomplish. Just don’t try to convince me that a financial plan is a good long term investment.
Ric Lager
Lager & Company, Inc.
