Financial Planning is Boring

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We've all been in that place of the conversation with financial advisors where they start using those buzz words designed to make them look so smart. They ask you the same questions they know you're not prepared to answer. "What's your plan? Do you have an asset allocation strategy? What's the Beta and R squared of  your current portfolio?" At this point you're making a silent checklist in your mind of things to do when you get home.

  • Bring in the trash cans.
  • Get the kids to do their homework.
  • Put away the groceries and start dinner.

None of which have anything to do with the meeting you're having right now even though you and your spouse agree it's important. If it's so important though, why are you zoning out? Is your advisor not engaging? Does their rather impressive vocabulary not "WOW" you and motivate you to start asking questions? "What is asset allocation? Tell me more about Beta!" ...said no one ever.


Let's face it. Most people have about as much interest in learning the financial jargon as they do of hanging from fishhooks attached to their ears. Still you've made the time to sit down with an advisor in the hope that they will do the heavy lifting and tell you what you need to do to be successful. You're likely just praying there will be a nice checklist to follow and you'll be financially secure and independent at the appropriate time, however life is always in motion and can change on a dime, so you're bravely enduring the reality of the snore fest because you want to feel like you're being responsible and doing the right thing. What's the point though if you're not drawn in and interested in your own finances? How could you possibly become excited about something so boring? By talking about you!

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Having a common vocabulary will help you feel understood. What a concept for an advisor! Someone that is not only intimately aware of the details of your finances, but knows you so well inside and out, that you're truly getting personalized  advice on how the changes in your life and their financial component will effect your desire to finally sit down and write a book or build a separate in-law space for the parents you know will be living with you soon. Moreover, the ability to reach across the table and talk about it in a way that makes sense to you.

One of the most important skills I've learned as part of our armed forces and largely due to my high school English teacher, Ms. Sabatini, is communication. Part of our mission at Storace Wealth Services is to help educate our clients so that we can raise our level of communication and mutual understanding.

It's the advisor's job to put it into words you can understand right? After all, you're the one footing the bill. For the most part I would agree with that. Who wouldn't? But what if I told you that meeting the advisor halfway would enhance your experience. Just like going to a sporting event for the first time, there's the electricity of the crowd, the food, the thrill of victory and the agony of defeat, but if you don't know the rules and the definitions it can be hard to follow.

To borrow from an old Run DMC favorite of mine, "You finally wake up, Doc's gone to town, round his back, through the hoop, then you scream TOUCHDOWN! You be illin"

In the spirit of becoming more engaged in your meetings with your financial professional, we have a few words and definitions to share with you that can help you feel closer to your advisor.

Don't worry, I promise this won't hurt.

Asset Class:

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A group of investments which are similar in their tax treatment, the laws that govern them, their risks, and how they react in the market environment. Some of the most well known and widely used asset classes are stocks, bonds, and real estate. Stocks are often further broken into Large Cap, Mid Cap, and Small Cap asset classes.

Large Cap: This type of asset class is made up of companies which have a total outstanding value of stock in the market of more than $10 billion. Large Cap is also commonly referred to as Blue Chip stock for the comparison started in the early 1900's between the largest and most valuable companies and the blue poker chip, which was one of the largest of its time. The companies in this asset class usually pay a consistent dividend and are the most financially secure.

Mid Cap: This asset class is comprised of companies which have a market capitalization between 2 and 10 billion dollars.

Small Cap: A market capitalization of 300 million and 2 billion dollars qualifies a company in this class. This class is characterized with higher volatility and risk, but may also achieve higher returns.

Micro Cap: This lesser known asset class is defined by companies with between $50 million and $300 million.

The smaller the market capitalization of a company, the greater risk you may be incurring in your investment. In general, as investors, we know that some risk must be taken in order to achieve a return on our investment. When evaluating an investment, which you should do with the help of a licensed professional, we attempt to weigh the possibility of loss against the possibility of reward.

As professionals, it's our job to make recommendations that are appropriate for you, but what does that mean? Think of your favorite Ben and Jerry's ice cream. I'm not sure if it's Ben or Jerry, but someone over there has been busy meticulously coming up with just the right recipe for Karamel Sutra. While I'm sure it's a trade secret, it might look something like 30% chocoloate, 30% vanilla, 25% caramel, and 15% love. Ok I made that part up, but that's what it feels like when I'm mowing down a carton of it in front of the tv.

In the same way, we create a mix of your investments that will attempt to produce your desired return on investment. To do this we have to carefully weigh your tolerance to risk. Maybe you're lactose intolerant whereas your best friend has one of those overactive metabolisms that burns calories like the space shuttle. At the end of the day, your friend's recipe doesn't take into consideration your specific dietary needs which, if not followed, could end in disaster. You may not make as much of a return as your friend does, but at least you won't feel bloated and uncomfortable along the way. Welcome to personalized asset allocation folks.

So the next time you're in a planning meeting, don't fear the drone of your planner's voice. Come talk with us about the plans that make you happy and be confident in how you're going to put numbers up on your scoreboard.