True Life: I Am My Own Worst Client

Coming to you live with a second installment of a “True Life” story featuring yours truly. Last time I shared a True Life story, I was writing about my decision to sell my wedding dress after our wedding and all the reasons why I felt it was justified. For those of you who were sitting on the edge of your seats…I did in fact sell my dress! I was so happy to have another bride experience the most perfect day in the most perfect dress.

This installment of True Life is headed in a completely different direction. Today I am sharing why I am my own worst financial planning client. I’ll start off by saying that most practicing financial professionals recommend working with another financial advisor on their personal finances. Even coaches need coaches sometimes. I always appreciated that advice but didn’t truly understand the brilliance in that advice until recently.

I’ll start off by saying that I love my job. As I’ve shared in pasts posts, working as a financial advisor is like the marriage of my dream jobs growing up minus the clothes and furniture but add in goals and money. My favorite aspect of my job, behind interacting with my clients, is creating financial plans. I love creating plans so much that I started drafting a plan for me and my, now, husband the moment we got engaged. Some brides to be will jump right to dress shopping after getting engaged, my first move was to create a financial plan and calculate our joint net worth. Crazy, yes, but he still married me 😊

You also probably know that I really like defining financial goals and creating strategies to achieve those goals like implementing sinking funds or setting up investment accounts. We recently accomplished a huge goal of purchasing our first home and have another big financial goal that will be achieved by year end. My husband and I check in regularly with each other for money dates and are always looking ahead at the next big financial goal we plan to accomplish.

So where am I going with this? As I just laid out, we have the big picture planning and goal setting under control but that is just a small fraction of what financial advisors do and what they need to know. That brings me to the first reason I am my own worst client is because I don’t know it all.

I Don’t Know It All

Looking back at my working career, I see so many missed financial opportunities as a young professional. I should have been saving more into my 401(k), I could have been more aggressive in using a Roth 401(k) and I probably didn’t need to save into an IRA contributory account if I wasn’t maxing out my 401(k). More on that contributory IRA in a bit.

These learning lessons are why I am so passionate about working with young professionals and helping them not experience a similar regret of missed opportunity. I learned some incredible lessons along the way that have helped mold me into a better advisor, but I think about what could have been. I wonder if I had been working with a third party professional earlier, someone with a different perspective or more experience, if I could have avoided some of these mistakes and be in a different position today.

Taxes

Tax planning is an entire area of focus within the financial planning world, the reason being that taxes touch everything. What I mean by that is most financial decisions you make during your life will have a tax implication and that it’s important to proceed with caution. I am by no means a tax expert, but I know enough to be dangerous. In some cases that is sufficient and in other cases it’s important to work with a tax professional to review the situation or prepare a tax projection.

This year I am in the boat of needing a tax professional to help me weigh the pros and cons of my 401(k) Rollover. As I shared in this post, my prior company was acquired by Savant Wealth Management making me #TeamSavant but I still went through the process of being onboarded as a new employee. One of the decisions I (still) have to make is what to do with my old 401(k). I am realizing that I need to reach out to a tax professional to help me fully understand both of my options.

  1. Rollover into my current Contributory IRA and lose ability to make future Roth Backdoor IRA contributions
  2. Rollover into new employer 401(k) and keep the ability to make future Backdoor Roth IRA contributions AFTER converting my current Contributory IRA balance.

I really like the idea of option two but converting an IRA with a sizable balance from pre-tax to after tax will create quite the ripple effect in our family’s tax situation for 2020. See the dilemma.

The easiest thing would be to roll into my IRA and close the door on future backdoor Roth IRA contributions but as a financial advisor I know the value of a Roth IRA and keeping that as an option for down the road. It’s situations like this that I recognize that I can’t keep doing this myself. Having the guidance of an objective, third party financial advisor would help drive us to a decision and stop procrastinating…

Accountability and Action

Did I mention I started this new job back in February and here we are in September and I’ve not made a move. Hence, another way I’ve become my own worst client, my lack of accountability and action over my personal situation. I encourage clients all the time to act on their old employer plans right away and here I find myself lollygagging.

Let’s start with the action side of this equation. I’ve been an employee of Savant since early this year and have yet to rollover my old 401(k) or transfer over my Health Savings Account (HSA). Fun fact, I learned something new about HSAs and that there is a difference between a rollover and transfer to an HSA. In the case of consolidating HSA balances, it’s called a transfer (refer back to section one – I don’t know it all).

I like to think I gently nudge and encourage my clients to consolidate accounts after switching jobs and in many cases will get on the phone to help them with the process. A perfect example of the value of having my own financial advisor is to get that same, gentle nudge. My goal is to get this complete before the end of Q3 and I welcome you all to check back in and hold me accountable to this deadline!

As for accountability, I have my husband who helps keep me accountable to our family’s savings goals, but I often think it would be helpful to have another person in the picture to share our financial goals with and forward momentum toward our financial goals. This could have been especially helpful when I was still single and just starting out in the working world. Working with a financial advisor is the same as having a money coach and accountability partner all in one.

An Objective Perspective

Money is such a personal topic of conversation which is why people often keep this topic so private, myself included. Yes, I share a lot about my financial life on here, but I’ve made the deliberate decision to not share my net worth or other personal data points like savings rates. There are some financial bloggers out there that choose to share that information and that is wonderful, but my objective has always been to educate and empower and I don’t think me sharing my family’s financials will accomplish either. Some things are meant just for your own personal consumption and can be empowering in that manner.

Okay, rant over.

While I don’t feel the need to share my personal financials with the entire internet, I do think it’s appropriate to have an objective third party that understands my financial situation and can provide their professional perspective. I’ve often thought back to some of my financial decisions and have questioned if it was the best course of action or if it was just the right course of action for me personally. Should I have paid this off first, am I prioritizing saving into the right account, am I spending too much money on clothes? These are questions that run through my mind constantly. I help my clients answer them all the time but have a mental block when answering those questions for myself. In every financial decision there is a mathematical approach and an emotional approach, I often wonder if I’ve taken the emotional approach one too many times and in turn “left money on the table.”

So there you have it. While I like to think of myself as a proficient financial advisor, I realize that I have a blind spot when it comes to my own situation. Things like tax planning and holding myself accountable and being objective about my things has made me my own worst client. I try not to get too down on myself because I’m sure other professionals, like doctors as an example, have come to a similar conclusion and have their own doctor.

That being said, I am currently in the market for a new financial advisor (holla at ya girl if you need a new client).

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