The Holiday Season and Redefining Wealth

“…..You... you said... what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save $5,000? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle. Well in my book, my father died a much richer man than you'll ever be!”

-George Bailey, from the 1946 Movie Classic, “It’s a Wonderful Life”

One of my favorite movies to watch during the holiday season, and for those that have seen it can picture the exact scene in the movie from the quote above.

Let me set the stage - George Bailey, the main character, was an ambitious, intelligent man from the tiny, boring little town of Bedford Falls, NY.  His vision for his life was clear: see the world and build enormous things - buildings, bridges, boats, or anything of reverence. His talent was only matched by his intrapersonal skills, and everyone in town loved him. Like many of us, he wished to leave a lasting impact on society, leave his mark on the world and in a big way.  

His father, Pa Bailey, started the ‘Building and Loan’ mentioned above. Upon Pa Bailey’s passing, George’s character was tested.  On the eve of George leaving for college, the board of directors of the Building and Loan met to decide the fate of the business and the allocation of assets.  Mr. Potter, member of the board, saw Pa Bailey’s passing as an opportunity to expand his wealth and seize control of the Building and Loan. The rest of the board was beginning to see no other way for the business to survive.  

To combat this, George lets the monologue from above flow from his mouth directed towards Mr. Potter. He sways the board in favor of keeping the Building and Loan Business open without the ownership of Mr. Potter, but on one small condition. George Bailey stays in Bedford Falls as the sole operator and owner of the Building and Loan.

Wealth – we all have our own definition, shaped by our past. Further, we all have a goal for our wealth, and my argument is that it centered somewhat around Financial Independence.  

Let us first define financial independence:

Placing no reliance on a job or anyone else to maintain your chosen lifestyle.

I want to have that definition be a reality for my family, and I would argue the reader does as well.  Before we can do that, we must define “chosen lifestyle.” Much harder to do, but much more important. Two weeks ago, we discussed the necessity of a household building as a financial structure. We addressed this with answering two questions – do my investments reflect my needs, and are we protected?  

If I may – lets expand on this idea of a financial structure by answering an additional question:

• Are we achieving the life we envision?

To truly answer this – we must first envision our desired life. What a novel concept! George Bailey can teach us a thing or two from this simple exercise – what goals do you want to address?  What outcomes do you want to realize?  

In a recent podcast, AWM’s Zach Miller coined a phrase called ‘Break the Condition.’ We are trained to focus on paper investment returns and view this as the measuring stick of success with our finances. Paper investment returns – this is all they are. These returns do NOT ever lock a client in with a financial advisor for their lifetime. If this were true, clients with positive portfolios would never leave an existing advisor for another. In my experience, clients want to be heard, understood, and valued.  How do we as advisors accomplish this?

1. Demonstrate technical expertise.
2. Listen to the client desired outcomes.
3. Construct a customized financial structure to achieve these outcomes.

This question takes a lifetime to address and only experts should be entrusted to help guide, listen, and advise. Life does not always go as planned – but your life necessitates an advisor who can help navigate these matters with you.

George Bailey never did go see the world – the movie ends with George realizing clearly what he wants out of this life. His friends, wife, and children trump his grandiose vision of skyscrapers and elegant cuisine. He came to this realization by working with a character named Clarence – a trusted advisor.

Conclusion:

A trusted advisor must be held to a higher standard than solely investment returns. Any advisor that you would consider handling your finances should be an expert in investments – but do not settle only for that. Partner with someone who will help you navigate life, address your needs, and help you redefine your wealth.