Rather, we're talking about something that I think should be important to us all.

Positive Psychology has blessed us with a wisdom. For all our inherent efforts to obtain "happiness" based on our investment accounts, or our job/pay, or bigger home, the reality remains that even with the attainment of those things, happiness still largely eludes us. It is it seems, an immutable reality that happiness breeds better performance in every aspect of our life and happiness is an "inside-out" play, not the other way around. 

In a recent article on Huffington Post Jen Grisanti takes from the recent talk at TED.com by Positive Psychologist, Shawn Achor (you can and MUST view the video here) the knowing that "the external world is not the answer for happiness."

That is why in wealth management, we refer to it as "interior design." It's been our experience that the most financially successful clients are those who begin with the notion that they'll first decide what their lives would be like were they their happiest and then, match their financial goals to acheive that life. These are almost always, the most grounded investors, the least likely to panic, the least likely to "quit" when things are getting tough in the markets. They then, invariably wind up being the folks who manage to "get it right" the majority of the time; in markets when they should be and not out when they shouldn't be. 

They're successful not because of a special wisdom about finance or tax policy or the economy or the global financial crisis. They're successful because their goal is to build their lives and they're simply using their resources to meet that goal. 

If you, as we do, start with the focus on the happiest life your plans will be much better, your investments more based on common sense and your willingness and ability to withstand the "whirlwind" of financial news and the whims of the financial markets more centered. Afterall, isn't the plan to live the life you want more than to outperform the S&P 500?

I have to thank Justine Musk for posting this to her Facebook page. You can read Justine's blog at www.justinemusk.com. 

I'd also highly recommend Shawn Achor's book, "The Happiness Advantage" which you can buy on Amazon or from your i

What constitutes great advice by the way? That's a good question because for all the advice that's out there, it's my opinion that not much of it would be classified as great. Courtesy of Google Images

In a recent post, Dan Rockwell of Leadership Freak, shared with us 7 Ways to Identify Great Advice. Since I've linked his blog on the topic, I'm obviously not going to share all seven ways with you here. But, I would like to comment on two of them that particularly resonate with me because I see them almost every day at BCM. 

First, in order for advice to be great, it has to have your best interest at it's core. All to frequently, especially in the realm of personal finance, the advice that you get has someone elses agenda at it's core, not yours. Advice that has someone else's agenda as it's driver can be both destructive and dangerous. 

Second is something that I remind clients and prospects of constantly, namely, "I can't change you!" To be sure, I can give you some motivations to change behaviors or perspectives and through that lense, I can hope that some behavioral tradeoffs get made. But, fundamentally, I can't change clients directly in any way. The reality is that my client's change themselves, I don't change them at all. 

Advice that results in positive behavioral change is among the most benefical and powerful kind of advice of all. 

I hope that you'll check out Dan's blog here so that you can be better skilled at recognizing "great advice" when and if you see it. 

It's the kind of advice we give every day to the clients of BCM. 

As is often the case, the authors help us understand the error of our ways by noting that we need to be fixated on making the most amount of money that we can on any day, at any given moment and in any given market. AND, true to form, they manage to provide us with some (suspect) remedies which, as you might imagine, play perfectly into "creating transactions" game which keeps Wall Street running. If you missed your best chance to create a sustainable retirement, you can fix it by simply [a] contributing more to your retirement plan and [b] picking some bullet proof stocks. Wait a minute, there are bullet proof stocks? Oh, ok, there are lists of bullet proof stocks (and funds, and UIT's and bond funds, and hedge funds, and can't miss land deals) but not actually any bullet proof stocks, just lists of them.

Ironic that the one salient theme would actually work, to monitor what you pay for your investments because overpaying results in almost guaranteed returns, even made the list. Odd that the one metric that might actually ensure that you make some progress came in third. That's sort of like telling Titanic travelers that they should [a] buy some floaties, or; [b] buy some long underwear and lastly, stay home. They're all good recommendations but an appreciative re-order of those recommendations seesms in order to me.
Amazing it is that you can write an article about the fall of someone elses retirement and never mention either RISK or GOALS? How exactly does that work?

Lest we forget, 2008 came about in world where RISK and GOALS weren't important. Greed was.
When you're "success" is measured in whether or not your greed was satisfied any successes you have will be short lived.

You'll blow your chance at retirement if you can't define what it is or how much it will cost.

As noted many times in my blogs; if you don't know what it will cost, you can't tell how much it will take to fund it. No amount of contribution will ever be "right" unless you know how much you need and no "investment selection" will ever be right until you know the rate of return you need to fund your goals.
If pension plans can take too much risk and wind up either overfunded or under-funded, why can't you?

Courtesy Google Images

In his post on Leadership Freak, Dan Rockwell draws some pretty stark comparisions between new beginnings and the wealth management process. I guess that's because the two are so similar. 

"Clarity instills confidence."

"Are you reacting aginst or reaching forward? Reacting seldom takes you where you want to go."

These are also quotes from Dan's blog post; "10 Questions That Give Vitality To New Beginnings."

As the realm of personal finance has come to grips with the fact that the return on the markets might not always be the thing that takes you where you need to go, they've finally latched on to the two things that can make a difference in financial success or failure, namely; controlling what you spend and planning. 

Every day it seems, more and more articles are written on why it's important to know what your future will cost, if for no other reason than if you don't know you can't ever tell if you've got the money to afford it. 

Most times, clients look at the effort of planning for their future and see the work it might take and it scares them away. What they need to see perhaps is the clarity and confidence. Most times, clients come to me to solve a problem and yet, the conversation is about reaction, not about reaching. 

If you're unwilling to do the work necessary to define success, it would appear to this observer that your chance of stumbling upon it may be harder than you think. 

And later than desired as well. 

The first step toward success will always be defining it. The next one will be measuring it. 

It seems that the fiscal cliff is the collision of a number of policy changes that are set to take place in 2013 that are destined to be the next fiscal impediment. 

The attached article presents the facts rather susinctly I feel and it comes with one of the more noteworthy admonitions...ignore it when you hear it. 

This all flows so wonderfully well with an insight from last weeks blog by Larry Swedroe. In discussing the predictive capabilities of our world full of "experts" Mr. Swedroe noted: 

"One of my favorite sayings is that there are three types of investment forecasters: those who don’t know where the market is going; those who know they don’t know; and those who know they don’t know but get paid a lot of money to pretend they do. In other words, they are playing an entirely different game."

Read up on the Fiscal Cliff here, and be ready to ignore it when the media grabs this by the tail and starts running with it. 

Sounder investment decisions help to prevent this kinds of dooms day thinking. 

"Does goal setting work? Yes, but not the way most people seem to understand it. In my experience, the real value of defining desired futures is not so much in the world the describe, but the change in perception the process of setting goals fosters.  David Allen, Productivity Coach and founder of Getting Things Done (GTD) from is weekly email "Productive Living"  Courtesy of Google Images

I couldn't agree more. 

Wealth Management takes on many forms. For most of the profession and the public, (unfortunately) it's an effort to figure out why you should buy something and exactly what that purchase should be. It's a process that has at it's core when applied in this way, something that you need. Implicit in that mode of operation is the embedded notion that a product is going to solve your problems. "Purchase this and it'll set you free!"  Really? If buying financial products solved the problem, we'd have a lot more 1%'ers than we do. You see, the 1%'ers are the people who built the stuff that you should buy. You purchasing their stuff has made them wealthy, not you. 

When you can focus your energies working with someone who relies on you to enunciate the life that will make you happiest; then you are the center of the process. "What would you do differently today if money weren't an object?" There's nothing to buy...only the belief in change. 

Many will say that it does little good to ruminate in wishful thinking of that sort. And yet, we are, what we think. When we focus on life as we want it to be a subtle change takes place; we begin to open ourselves to the possibility that our dreams can in fact be our reality. Maybe not immediately, but over time. If you are what you think (and you are) then thinking that you're destined for greatness is going to attract a lot more positive outcomes than any of your other options. I don't know about you, but contrasting buying something and feeling "insured" as opposed to "on my way to making my dreams a reality" I'm voting for my dreams. 

"The reason for long-term goals is the permission they give us to identify with the greatest value we can so it changes our filtered perceptions. The future never shows up (have you noticed?-- it's always today!)"

That's another quote from David Allen who was talking specifically about Getting Things Done. 

As am I.  

The good news (sort of) is that the people that get it wrong are a lot more of the people than you think. 

We've been pursuing passive investment strategies now for more than a few years, knowing that we do in fact know. 

I love it when an article concludes with the comment: "Finally, it's my experience that the vast majority of investors don't even know what their returns have been relative to appropriate benchmarks. One reason is that Wall Street doesn't want you to know- if you did, you might stop making it rich. Another might be that the truth would be too painful, so investors themselves don't want to know. But you should know. Without such information, there is no way to know if your strategy is working."

In this great article, "On Magical Thinking and Investing" Larry Swedroe hits all the high notes. 

Read "On Magical Thinking And Investing" here. 

Courtesy of Google Images

I'm not going to attempt to write a treatise on the nuances of Monte Carlo simulation or security coefficients, I'm going to keep this blog post short and to the point. 

The conversation has begun anew in the circles of academia and personal financial professional journals that confirms what we've known all along: what you spend likely has more to do with your success than you think. 

Tied inexorably to that last statement is the other focus of a lot of press, the return projections for the markets are a full 3% under historical norms taken by most standards, including and perhaps most importantly, those of individual investors. 

So there you have it. Put these two comments into a shaker, give it a go and when you pour it out what you get is a recipe for people spending more than they should on the premise that they'll earn more than they will. And so the spiral of having less the next time continues.  

Is it manageable, this spend/return equation? It is, but not all at one shot it's not. As the world changes and as returns change, so to must the math. The math is long and complicated and what's harder is that there are more than a few subjective inputs that go into constructing the framework. (Note: You shouldn't be developing the subjective framework, though clearly you should have input into it's components and it's design.)

This is where we make the case for Wealth Manager as guide, not map maker. Most consumers when considering the use of professional wealth managers default to the fact that no one can be all seeing and all knowing so why pay for advice that can't stand up over the test of time? The fact is; when was someone doing something about a problem ever better than someone doing nothing about it?

The reason that wealth management is both art and science is because an "exact science" it is not. But like any good guide, you start from the premise that you can get to the destination in any number of ways, the question is; which one will be most efficient given the details as they play out. 

Were it for the math alone, personal finance would be hard. The fact that the math changes as much as it does makes it even more difficult. 

All things being equal; when you contemplate your future don't lose sight of the fact that you make many contributions to the math, but perhaps the most important one is by deciding what to spend and why. While it's only one variable in a very long equation, it just might prove to be the most powerful one of all. And unlike the markets, you control it. 

You can tell when there's a lot of misinformation when it could be a monthly blog topic and you'd never have to devise another one to write about again. 

As the markets start to improve, the flood of "the next bad news" has been surplanted by "the next best thing you can do." And, that's what the financial periodicals and websites are starting to spew out. There's all sorts of recommendations, buy high-dividend paying stocks (isn't it odd that right when tax rates are poised to increase that there'd be a recommendation to buy stocks who generate taxable distributions?) or go for "yield" to keep your income up (better known as the "straight-jacekt approach, it never works) or get entirely out of bonds and cash and put everything you own into stocks because "now is the time."

Every year, thousands of people run the New York City Marathon. Probably less than 1% of them are running it to win it. Everyone else, God bless them, is out there for some other much more personal reason, and that's exactly my point. 

The financial media (and way too many investors for that matter) come to a common worldview that what every investor is doing or must do, is to attempt to make as much money as they can at every turn of the market, irrespective of goals, timing to reach those goals or perhaps more importantly, the risk involved. Just like the marathon, most investors should be basing their investment decisions on more personal matters such as their lives, their financial security and their willingness to accept risk. Not on maximizing the return on their money at any cost. 

And, thankfully, most of the people that run the marathon with no hope to win it, still plan on winning. But they want to win something less newsworthy, but equally as valuable, their own progress in their heads and hearts. 

Winning takes on many forms. Losing money takes on one. When it's gone, it's gone no matter what the race may have felt like at the beginning. So why not focus on your goals not someone elses. 

On February 22nd, his blog titled "The map has been replaced by the compass" (you can read that blog as well as the other "February" bloggings by Seth.) another interesting paralell has been drawn between whatever inspired his blog on that day and the wealth management process. 

In that blog, he writes..."The compass, on the other hand, is more important then ever. If you don't know which direction you're going, how will you know when you're off course?

And yet...

And yet we spend most of our time learning (or teaching) the map, yesterday's map, while we're anxious and afraid to spend any time at all calibrating our compass."

In the world of personal finance there also exists both map and compass.

And, likewise, maps while inferior at the job tend to win out.

One word of caution; if your map is getting all your attention that's a problem you need to work at fixing.