Anatomy: separating or dividing into parts for detailed examination.
Ruin: a. a state of complete destruction
b. the state of having lost money, social status, etc.
– Merriam-Webster
As an advisor, I have spoken with hundreds of practice owners and I have seen them go from complete financial ruin to achieving optimum financial success and everything in between.
There is an anatomy of financial ruin.
I want to ensure that you know exactly what it is so you do not walk down this path of destruction. If you find you are on the opposite side of financial success, you need to know with certainty that there is a way out.
Financial ruin could be defined as a state or condition where one has scarcity of money, has suffered large losses of income, where investment value and assets are overleveraged, where there is burdensome debt, where there are no apparent immediate solutions and seemingly all hope is lost that one’s current financial condition could possibly be rehabilitated.
Of course most of us do not intend to be in financial ruin. However, we can trace a definitive sequence of actions that one has taken to lead him down this destructive path. Knowing what has caused the ruin is the silver lining of hope that one can find their way back to the path of success.
Here is the formula for “ruin”:
CONFUSION followed by continued DESTRUCTIVE ACTION = RUIN.
Confusion is simply a symptom of not having a plan and not keeping correct statistics. As applied to finances, the key is knowing exactly what the Optimum Financial Condition is and then aligning all your efforts and keeping in your discipline to achieve it.
This financial confusion can manifest itself in many ways leading to destructive actions and ultimately financial ruin.
Let’s examine some examples:
- “I don’t know how to get out of debt.” – (confusion)
- “I’ll take some of my reserves and retirement and use it to pay the debt.” – (destructive action)
- “I’ll invest my remaining reserves in highly aggressive investments to make it up.” – (continued destructive actions)
This of course could lead to huge financial losses, penalties, and eventual financial ruin.
- “I don’t know why I always have problems covering payroll and not paying myself.” –(confusion)
- “I will stop the marketing and consulting services so we can save money.”
– (destructive action) - “I know my office manager is lazy and incompetent but I just can’t confront firing her.” – (continued destructive actions)
- “I think I will go buy a new laser machine even though we really can’t afford, I am tired of my staff complaining.” –(continued destructive actions)
Again, this will eventually lead to an insolvent business and inevitably financial ruin.
The anatomy of ruin is not exclusive to personal finances. It also applies to other aspects of your life. The primary reason people use destructive drugs, alcohol, or psychiatric medication is because there is some confusion in their lives which they don’t know how to handle or confront.
Ironically the derivation (root) of the word confusion comes from the 13th century Old French “to overthrow, ruin” and Old French as confus “dejected, downcast, undone, defeated, discomfited in mind or feeling”.
Most people in this country are in financial confusion – but YOU don’t have to be one of them.
Next you need to find out where you are weak and where you are strong and we have an assessment to help you spot exactly where YOU are – it’s called The Financial Prosperity Index®. Visit www.financialprosperityindex.com.
Next I’ll give you the formula to help you get out of confusion on back on the path to financial success. Here is how to handle it:
- Take a pen and paper and write down a list of everything you are confused about in your business and your personal finances.
- Call your business consultant and your financial advisor and get clarification on each of the points.
- Take the basic and simple actions which will lead you toward the optimum.
If your current advisor does not give you answers based upon statistical evidence or natural laws, then I suggest you find one who does. At Econologics Financial Advisors we have designed an informational academy to help you get back on track. This 3-day workshop was specifically designed to help private practice professionals lessen the financial confusion so they can feel more certain they are taking the correct actions to help them achieve their financial goals. If has been 2 years since you attended a financial planning course, then you need to register for this life-changing event – NOW. Your survival depends upon you getting and staying OUT of financial confusion. Visit www.privatepracticemillionaireacademy.com for more information.
FAQs
Financial advisors and insurance agents may have a certain reputation in many circles. While I believe the majority are honest, some advisors may give the rest a bad name by focusing on the commission instead of the client. And, even if you meet an honest advisor, how can you know they will do the job suited for you?
Why do so many financial advisors quit? ›
Lack of work ethic. It takes a lot of hard work and discipline to break into a career as a financial advisor. While many are willing to work hard for a period of time, fewer are willing and able to maintain the high-level work ethic required to survive and thrive as a successful advisor.
Are financial advisors declining? ›
More than a third of financial advisors will retire — leaving a profession in which nearly three out of every four rookies fail to break into the field — with more than two-fifths of the industry's client assets up for grabs upon the older generation's exit, according to a report last month by research and consulting ...
What is the washout rate for financial advisors? ›
Over 90% of financial advisors in the industry do not last three years. Putting it simply: 9 advisors out of 10 would fail!
What is a red flag for a financial advisor? ›
Red Flag #1: They're not a fiduciary.
You be surprised to learn that not all financial advisors act in their clients' best interest. In fact, only financial advisors that hold themselves to a fiduciary standard of care must legally put your interests ahead of theirs.
How do I know if my financial advisor is bad? ›
If your financial advisor isn't paying enough attention to you, isn't listening to you, or is confusing you, it may be time to call it quits and find one willing to go the extra mile to work with you, serve your best interests and to keep you as a client.
When should you leave your financial advisor? ›
Poor performance, high fees, strained communication and stagnant advice are among the reasons to look for a new advisor. Kevin Voigt is a freelance writer covering personal loans and investing topics for NerdWallet.
How long does the average client stay with their financial advisor? ›
For instance – did you know that according to a study1 from Etrade Advisor Sales in 2019 – the average percentage of clients that leave during a given year is 20% within a year. And 25% within one-two years. Or - put another way - roughly one-fourth of new clients may leave within the first two years.
Are financial advisors really worth it? ›
A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.
Will financial advisors be obsolete? ›
If you're wondering whether doom and gloom stories about financial advisors becoming obsolete, here's some reassurance: people will always need financial advice.
10 Things Your Financial Advisor Should Not Tell You
- "I offer a guaranteed rate of return."
- "Performance is the only thing that matters."
- "This investment product is risk-free. ...
- "Don't worry about how you're invested. ...
- "I know my pay structure is confusing; just trust me that it's fair."
The study reveals that 70% of millionaires work with a financial advisor, compared to just 37% of the general population. Moreover, over half (53%) of wealthy individuals consider their financial advisors their most trusted source of financial advice.
Is 2% fee high for a financial advisor? ›
Without knowing the full scope of services delivered by the advisor, 2% may be too expensive for a portfolio of your size and for a relationship in which tax advice is not provided. This immediate, high-level evaluation is based on benchmarks for typical advisory fees, which we'll dive into shortly.
Is 1% a lot for a financial advisor? ›
While the typical annual financial advisor fee is thought to be 1%, according to a 2023 study by Advisory HQ, the average financial advisor fee is 0.59% to 1.18% per year. However, rates typically decrease the more money you invest.
What is the bias of financial advisors? ›
For example, if a financial adviser is told that a client's risk tolerance is "medium," they may be more likely to recommend investments that are riskier than they actually need to be. Another common bias is confirmation bias. This is the tendency to seek out information that confirms our existing beliefs.
Can financial advisors be trusted? ›
All financial advisers should be registered with the FCA. This means they meet the right standards and you get more protection if you're not happy with the service.
Are financial advisors good or bad? ›
A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.
What are some disadvantages of using a financial advisor? ›
Potential negatives of working with a Financial Advisor include costs/fees, quality, and potential abandonment. This can easily be a positive as much as it can be a negative. The key is to make sure you get what your pay for.
Are financial advisors biased? ›
Behavioral finance biases can affect your portfolio in many ways, from advisors avoiding or underestimating risk to making decisions based on a “hunch.” Below are six types of biases that may affect your advisor's choices—and your portfolio.
