During speaking engagements, I like to talk about financially successful people and how they are constantly focused on building their respective empires. One of my favorite examples is Beyonce and Jay-Z. This is what most might call a power couple. As a power couple, their time (like most others) is precious, and I’d assume the two of them are really busy. Busy being parents and being moguls. So when do they find the time to become experts in all the various components of financial planning? They don’t! Highly financially successful people (from my research over the years) all do the same thing regarding their financial affairs. They have a group of people they work with to keep their finances on point. This group of people is called the Money Team.
In my opinion, EVERYONE needs a Money Team! (Yes, that includes me too) This team of professionals is comprised of the following (not in order of importance):
- Banking professional
- Tax professional
- Insurance professional (there are numerous you might need)
- Investments professional
- Real Estate professional
- Attorney (there are numerous you might need)
- Financial planner
I’m sure some of you reading this are saying, “I can’t afford to pay all these people.” And that may be the case now, but think about it this way. You are making an investment in these professionals to ensure that your financial house is in proper order. Remember, do you really have the time or want to devote the time to become an expert in all seven of those areas? Some may decide to go the Do-It-Yourself (DIY) route, and that’s perfectly fine. So keep at it as long as you get the results you desire.
However, experience has taught me that many DIYers tend to lag behind in accomplishing financial goals in the time frames they initially set. Plus, because they don’t work with experts, they sometimes make or have made questionable financial decisions that weren’t in their best interest. Nobody is there to validate the decision(s) in question, so many DIY financial people don’t achieve the financial success they dream about.
When discussing the Money Team with people, one of the first questions most ask is, “Why do I need all these people?” Let me break it down for you, and I’ll tackle each team member’s importance in order.
Banking professional – Banking has changed over the years, and the industry relies heavily on conducting business virtually. However, what hasn’t changed is that people will always need to borrow money. So when you need money, looking good on paper or on the computer is one thing, but having a relationship with a lender could prove highly beneficial for your transaction. If you don’t believe me, ask a business owner who has tried to get a loan from a financial institution with no previous relationship.
Tax professional – Everyone should pay their fair share of taxes and not a cent more. And everyone should make it a point to avoid any issues with the IRS. If you’re a business owner, you should know what you can and can’t do from a tax standpoint based on how your business is structured. If you don’t work with a tax professional, you’re probably paying the government more money than you should. Having a tax professional is critical to your financial success because they pay attention to the tax laws and codes that are constantly changing, be it federal, state, or local. And, you don’t have the time (nor do you plan on making any) to do that kind of research to stay up-to-date with all the taxes changes.
Insurance professional – There are various types of insurance you might need to consider having during your lifetime: life, disability, health, umbrella, business, and long-term care, just to name a few. This might prompt you to connect with multiple insurance professionals because particular licenses are needed to sell certain types of insurance. Thus, you must make sure the insurance professional is properly licensed. No matter what kind of insurance you’re looking to add, the process should go in this order. With the help of your insurance professional, you (1) determine how much insurance (whatever type it is) you need, then (2) explore the various options based on the need. The process should always follow those steps.
Investments professional – This team member has fallen out of favor (somewhat) because many people feel they can use technology and do their own investing, be it for general purposes or retirement. While I know this to be true, studies have shown that the average person gets better investment returns over the long haul simply because they work with an investment professional. Why? Because this professional will help you not get emotional when it comes to making investment decisions. Just ask yourself, what did you do with your investments back in 2008-2009? Did you run scared and take your money out of the market? Or did you invest more and capitalize on one of the greatest bull market runs, which started in the latter half of 2009? Having someone close to you who can help you make prudent investment decisions is why this person is so important.
Real Estate professional – Whether you’re looking for your first home, an investment property, or working to build your commercial real estate empire, you will probably need this expert to assist you. The real estate market is like any other market, it will ebb and flow, and at times it’ll be a buyer’s market, and during others, it will be a seller’s market. So it will be easier for you to navigate the market if you have this professional by your side.
Attorney – When it comes to legal matters, you will need assistance from a legal professional. Like the insurance expert, you might find yourself enlisting the services of multiple attorneys depending on your specific need and making sure your attorney is properly licensed. So, for example, if you have an estate planning need and want to make sure your family will be good long after you’re gone, you’ll probably be better served by an estate planning attorney instead of a divorce attorney.
Financial planner – This member could serve as your team’s quarterback. They aren’t trying to sell you any particular product, but they work with you to give you clarity about your financial situation. Essentially, this team member helps you see your entire financial situation from a 5,000ft view. Plus, as they work through the planning process with you, they will probably ask to coordinate their efforts with your other team members. For example, if your financial planner is having a retirement conversation and trying to figure out if a Pre-tax or a Roth contribution is better within your 401k, they will want to consult with your CPA or accountant. Lastly, you may meet with your financial planner at some agreed-upon frequency, like quarterly, twice a year, or annually. This will ensure that everything is going…as planned.
The key takeaway here is time. You don’t have enough time in the day to become an expert in everything. Let the experts do their job because their sole purpose is to help you do the heavy lifting. Becoming a financial rockstar isn’t easy when you go at it alone. But, having your Money Team in place will allow you to get back to living life with a lot less stress.
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