Drizzt: The Money Diary deals with tips and strategies to make better decisions with your money. It also deals with caveats/pitfalls in managing personal assets, debts, income and expenses.
Most of us are often not trained to provide financial advice or understand financial planning from the on start. That is why we turn to a financial advisor to provide us so that we can gain clarity to make better financial decisions.
While I often do not hear of financial advisors falling into debts and not coming out of it, or financial advisors going bankrupt, I am not sure if poor financial decisions takes place even among those we least expect from happening.
Here is an article I cam across in the New York Times where a financial planner and author shares his deep shit story of how he lost his house. From this article, we can learn a few things:
- The ramification of bad financial decisions can be very lasting, and affects the well being of your family, yourself physically and mentally.
- If you make a bunch of bad decisions, came to terms with them, make sense of them, you can go on and write a book about them.
- Some financial advisors get into the industry not knowing much about financial planning and through the system teaches them about selling more than anything.
- Having a nice income makes you fall into the zone where you think you can afford a lot of things.
- When the crowd is doing a prevailing thing such as making dangerous financial decisions, you tend to irrationally follow the crowd, because it is safer to be with the crowd.
- Borrowing 100% and not thinking about the terms of the loan and what are the pitfalls.
- Borrowing against the house to finance their lifestyle.
- Their lifestyle exploded and on the hindsight, he thinks a lot of that lifestyle can be foregone.
- Projecting current price growth as the long term average growth.
- Risk is an arbitrary concept, until you experience it.
- Evaluate more the consequences of a decision you make rather than the probability of it happening.
I embed the article here for all. I am probably not the guy with the most financial planner friends but have you guys hear similar stories of bad financial decisions made by people that really are in the business of providing these advices?
How a Financial Pro Lost His House
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Jim
Monday 28th of November 2011
Hi Drizzt
Most of the financial planners I met do not follow their own advice. Most of them are more interested in buying new condos, new cars, expensive watches, and improving their wardrobe to show to potential and existing clients that they are successful financial planners.
Doing all that is not wrong. I just want to state that most finanical agents I met are good sales agent. Nothing more. They don't make money following their own advice. They make money by getting others to follow their [agent's] advice.
My friends who are agents tell me that during their meetings with their agency leader or team manager, the manager would encourage them to get better sales by flaunting high incomes, big houses and investment condos or their ability to change cars every year.
Drizzt
Monday 28th of November 2011
hi Jim, thanks for contributing. I heard the same thing myself. but the question is that do they fall into that finance horror trap themselves. if they don't then at least thats good for them!
Panzer
Monday 28th of November 2011
Hi Drizzt
So far, no financial planner I've encountered since the day I started working has ever shared with me fundamental principles beyond need to save and invest. I've yet to hear them expound on living within one's means, to grow that means.
They focus too narrowly on a telling you of a perceived need and then recommending their product that meets that need.
I've financial planners who didn't know what a treasury bill was. That was partly why I realised I must learn to manage my own monies because the "professions" were not very competent in some instances.
Be well and prosper.
Drizzt
Monday 28th of November 2011
thanks for sharing Panzer. Your account seem to be the same as mine. One of my advisor actually told me it is better for her to focus on the customer management and the product selection to the experts in the company.