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The Biggest Mistakes Business Owners Make: Advisors’ Advice
Leland was recently featured in ThinkAdvisor’s Advisors’ Advice column discussing the biggest mistakes business owners make. You can click the link below to read the full article, but here is Leland’s excerpt:
Honestly, the biggest mistake I see my clients make is having a lack of direction or intentionality around their finances (spending, investing, insuring, taxes, etc). Most of the time clients come to me and when we dive in they have no clarity as to where they are or where they are going. It is as if they are running a ball down the field, not knowing which endzone is theirs, or where it is. Because of this, we find a huge set of inefficiencies in their investment choices because they are investing at random, taking too much risk, or not enough, or don't have a properly diversified allocation to meet their goals. I find inefficiencies in their tax preparations because they are unaware of different deductions and strategies. I find inefficiencies in their insurances, being overinsured and paying too much, or underinsured and being exposed to too much risk. It is a mess. The list goes on.
How I help is by beginning the process by getting a clear understanding of who they are and where they want to go in life. It is much more qualitative information than quantitative. Once I understand what they value and where they want to go in life, then we dive into their numbers. This allows us to know where on the map they want to go. Then we get a clear picture of where they are in light of where they are going. I find that spelling it out in a way that says, "this is what you have said you value, and this is a crystal clear picture of where you are right now, therefore here are the best ways to get you from A to B" allows my clients to see it and creates buy-in. This is when I see clients creating intentional decisions around their spending, investing, etc. This is when I see behavioral finance issues subsiding because they can see the cause and effect. If we don't know where we are on a map, or where we are going, we are bound to get lost. When we know where we are going but not where we are, we are also going to get lost. When we know where we are going, and exactly where we are, we can create the fastest and best route to get to our destination.
In summary, I would say the biggest mistake I see people make in financial planning is not having a plan at all.