The Smart Money Philosophy

Steve Lear |

By Dan Lear, CFP®, BFA™

With help from think2perform.

As part of our recent BFA™ training, the advisors at Affiance Financial teamed up with think2perform to help increase the ways that we can help you, our valued clients. One key concept that think2perform teaches advisors is the Smart Money Philosophy.

The Smart Money Philosophy helps deal with the certainty of uncertainty that all of our clients face. Am I going to live past 100? Am I going to need to go into a long-term care facility? What happens if I get sick or hurt? What if the market crashes? These are all examples of curveballs that can be thrown at you. Our job as financial planners is to prepare you financially for this certainty of uncertainty. One practical way we do that is by making sure that whenever you need money, you have a smart place to get it.

As think2perform articulates, the Smart Money Philosophy uses one principle, two rules, and four skills:

The principle is responsibility. It is our responsibility to provide enough information and guidance to enable our clients to make decisions that are best for them in the long run. As our clients, it is your responsibility to use the tools and professional advice that we provide to make careful, thoughtful choices about how best to prepare for your future.

The two rules are:

  1. Always prepare yourself for the certainty of uncertainty. This can mean having disability or long-term care insurance. Or, it can mean having the right mix of stocks and bonds in your portfolio, so that as the market fluctuates you always have a smart place to obtain income.
  2. Always make your financial decisions after first reflecting on your personal values. Reflecting on your values won’t make you any smarter. But, it can help you make smarter decisions. See the four Rs below.

The four skills are also called the four R’s. They are:

  1. Recognize. When thinking about uncertainty, we ask that you pause and recognize your thoughts, your emotions, and your actions.
  2. Reflect. Reflect on your personal values, the big picture, and your long-term goals.
  3. Reframe. Reframe your thoughts to be better-aligned with your personal values and goals.
  4. Respond. Make a decision that is consistent with your personal values and goals.

These tools (one principle, two rules, and four skills) give us a clear and simple framework to help you make smart decisions about difficult topics.

In practice, following the Smart Money Philosophy helps us ensure that you have a plan in place for handling the financial implications of each of the following:

  • Life
  • Death
  • Good Health
  • Sickness or Injury or Needing Care
  • Strong Economy and Markets
  • Weak Economy and Markets

At Affiance Financial, we are working to implement the Smart Money Philosophy framework into our DNA. Much of it is similar to the work we have been doing for clients for years without even realizing it. But other parts, such as the four R’s, are enhancements that allow us to think about how we can serve our clients in a new way — by aligning their financial plan with their personal values.