Think back on all the conversations you have had with your clients over the past year. My guess is that many of them had you repeating the same information, topics such as: the importance of financial planning; the difference in expected returns between equities and fixed-income; managing debt; reducing taxes; RRSPs vs tax-free savings accounts; and so on. That’s because these are the topics that affect the largest number of clients, most frequently, in their quest for financial peace of mind.
On the one hand, you could say it’s boring to have to spend your time as a financial advisor with significant credentials explaining the basics and educating clients on topics that are so familiar to you. Alternatively, you could take the position that a client who has a fundamental understanding of what drives investment results, how to minimize the impact of taxation and buys into the effectiveness of a disciplined approach to financial planning is a much better client for having been so informed.
Either way, Managing the Bull: Detect and Deflect the Crap, A No-Nonsense Approach to Personal Finance is a book you probably would like most of your clients to read. It will either help relieve your boredom by doing much of that basic educational groundwork with clients for you or it will provide your clients with sufficient information and a language that will allow you to move more quickly and elegantly beyond the basics into the more esoteric aspects of helping your clients manage their personal financial affairs.
The book’s bark is certainly worse that its bite, in that instead of being an exposé on all things nefarious in the world of financial advice, as the title and subtitle might suggest, it is a compendium of concise descriptions and essential insights into the worlds of financial and investment planning. Written by highly regarded financial advisor David Christianson in an easy to read manner with 60 short chapters of three to four pages each, the book follows the same logical progression of thought and process that any advisor might with a client.
The rodeo metaphor is carried through from beginning to end. Part 1 of the book is entitled Ignore the Bull: Plan Your Path to Financial Independence and encourages readers both to visualize what they want their world to look like at some point down the road and set SMART (specific, measurable, attainable, realistic, timely) objectives for getting to where they’d like to be from where they are today.
Part 2, entitled Riding the Bull: Making Money Work for You, deals with being “an owner, not a loaner” through equities investments over fixed-income. This section also describes the six-step financial planning process and what to look for in a financial advisory relationship.
Part 3, Tightening the Reins: Earning and Spending Wisely, addresses issues surrounding debt management and the use of “good” vs “bad” credit.
Part 4, Growing Your Herd: Insider Tips on Investing, deals with the value of diversification and the follies of market-timing.
Part 5, Working the Bull: Reducing Your Tax Burden, introduces the “three Ds” of tax planning: deduct, defer and divide.
Protecting the Bull: Tackling Risk Management is the focus of Part 6, which covers the gamut from property and casualty insurance coverage to life, critical illness and disability insurance, as well as employee benefits.
The book concludes with Enjoying the Ride: Putting Your Plans Together, a section on the financial aspects to be considered in the later stages of life, such as income generation, estate planning and philanthropy.
This next statement may seem an odd endorsement: there is nothing in this book that should surprise any advisor. In fact, as you read through it in just a couple of hours, as I did on a recent flight between Toronto and Regina, you will repeatedly find yourself saying, “Of course, I know that” or, “That’s the way I describe it to my clients, too.” In my view, that’s a good thing. The author has covered a wide range of topics in which you need to be well versed to carry out your responsibilities as an advisor.
The real merit in Christianson’s effort is in its usefulness as a reference source for clients to become more knowledgeable about the work you will do together so that your conversations can be more focused and relevant. This book will not detract from your value as an advisor in any way. In fact, it will add to it because with the preliminary understanding of these topics in place, you will be free to focus on the higher level aspects of financial advice and the nuances of your clients’ individual circumstances. IE