Be Proactive in Wealth Management (Guiding Principle #5)
In my previous four posts I introduced my guiding principles of wealth management, along with the first four principles (links to one, two, three and four). Today I will discuss the fifth and last guiding principle:
Be specific and proactive by identifying and implementing the actions that will result in the best permanent changes
Over the years, I have had the privilege of observing how clients meet challenges and tackle opportunities. Some have a knack for succeeding in any task they take on, while others seem to struggle more than they need to. Eventually, I saw a key distinction between these two groups: Successful people are usually very specific and proactive, while those who struggle tend to be vague and reactive. They set goals, but they do not follow through with a plan of specific actions aimed at meeting those goals. Consequently, instead of controlling events, they wind up responding to events. Getting stuck in reactive mode is another example of the 85% Trap.
By contrast, when successful people see a need or set a goal for themselves, they develop a specific plan of action. In keeping with the concept of the Essential 15%, they strive to find a permanent solution to every challenge, as opposed to a solution that requires ongoing effort.
Applications to Wealth Management
Let’s look at a common goal, saving money, as an example. People who are vague and reactive might set this goal, but their “plan” for increasing their savings could be as fuzzy as “Try to keep an eye on spending.” A “solution” like this demands a constant renewal of resolve, and this resolution can vanish in response to unplanned events or mood swings. It is much more effective to say, “I will change the amount of my income transferred directly into my savings and investment plan from 10% to 15% each paycheck.” That is a specific, proactive, long-term solution.
Sometimes, a good permanent solution is as simple as engaging the right talent to help you manage ongoing needs like accounting and estate planning. Other times, the solution is knowing what you should stop doing in order to do something else that’s more valuable in the long-term. For example, you might decide that your career would benefit greatly by volunteer service on a national industry board or advisory group. A person who is vague and reactive might say, “That’s a great idea, but I just don’t have the time.” A specific, proactive person says, “I’ll make the time by retiring from another board, or delegating one or two of my projects.” Any task that has the advantages of the Essential 15% is worth doing, and you’ll have time to attend to such tasks if you avoid the 85% Trap.
These are simple examples, but you can apply this basic approach to any type of goal. You start with the end in mind by asking, “What is my desired outcome?” For each objective identified, ask, “What is a specific, proactive, and, if possible, permanent solution?” This is how successful people march forward through life. They do not try to solve the same problems over and over again. They devise permanent solutions that give them the freedom to pursue new challenges and growth opportunities.
Joseph J. Janiczek is the founder and CEO of Janiczek Wealth Management, one of Denver’s top financial advisory firms*. This article is adapted from his book, Investing From a Position of Strength.