Behavioral Finance: The Key to Your Financial Independence

By
August 4, 2020
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Recently, I came across two competing headlines: “Dow Dropped Because the Wheels are Coming Off” and “The Dow is Up Because there are Flashes of Optimism.” On any given day, financial markets swing—one-day values are up and the next they are down. Trying to figure out how to build your wealth by focusing on market ups and downs can be overwhelming. I choose to champion an altogether different approach—behavioral finance. I believe the key to long-lasting financial independence lies in individual behavior inasmuch as it does the markets or various investment tools. Knowing that success lies within you – your choices, your responses to the market, and your long-term habits over time – rather than in the whims of the market, keeps you on the road to financial freedom.

Dangers to your wealth aren’t so much the downturns in the market as they are your own biases and emotions. Behavioral finance requires discipline and rational thought processes which can present challenges for many investors. We may feel obligated to put our kids through colleges we really can’t afford. Keeping up with the Joneses can deplete our savings or prompt us to invest in things that aren’t aligned with our long-term financial plan. And, in times of stress or change, we may be tempted to react by pulling our money out of the market or by doubling down on an investment. Such actions might play out well in our heads but disastrously so in real life. Ultimately, behavioral finance shows us that individuals carry much of the responsibility for their own financial success.

When you assume this responsibility, it becomes clear that you also gain control of your financial future. You have the ability to build wealth and establish a sense of security without worrying about the market. After all, it is the plan and the decisions you make (or don’t make) that have the greatest impact on your journey to financial independence. So, you may wonder, how do I embrace this concept of behavioral finance? First, you have to do some analysis – predominantly on yourself. What kind of spender/saver are you? Is your money going towards your goals and values? Are there steps you should take to limit habits that lead to unhelpful emotional responses? Besides self-reflection, you will need to create a financial plan. Whenever you are tempted to pursue a course of action, pause, and make sure it is in line with your plan’s goals. If it’s not, you must weigh the risks against the rewards. For those situations that require deeper insight, another great tool is a trusted financial advisor. Their expertise and guidance will be an invaluable resource as you strive to build wealth and turn your dreams into reality.

You have a multitude of tools at your disposal once you realize that financial independence is yours to create. It will take work, discipline, and time, but with that comes agency and autonomy. Start planning now so you can start making the decisions and exhibiting the behaviors that will set you up for a prosperous future.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

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By
David McDonough
February 18, 2021

What is a fiduciary?

When selecting a Financial Advisor, it’s important to know they will be looking out for you and the money you worked hard for all your life. Not all financial advisors are the same. When considering a financial advisor to partner with, it’s important to know if they are fiduciaries, meaning they will be ethically obligated to work in your best interests to help you reach your goals.

Why choose Trilogy?

At Trilogy, we operate by suitability standards in offering advice and recommendations that are the most suitable to your needs. We aren’t just salesmen looking to sell products that earn the highest commission. We are dedicated Advisors, financial life planners, who use our expertise to guide you to make smart money decisions. We recommend investments and financial products that are the best fit for your life situation.

Trilogy Capital Inc. is a Registered Investment Advisor. We are a fee-based firm. That means some of our Advisors earn commissions from the sales of certain insurance or securities products. While this incentivizes our Advisors to be the best they can be at their job, be assured that they put people first to select the best solutions for you.

You have a team behind you

When you work with Trilogy, you don’t just have just one Advisor, you have a team who have an ethical duty to recommend what’s best for you. We are specialists with decades of experience in wealth management and protection.

Life planning

With our Advisors, you can be sure they have a fiduciary duty of care to work at the highest level of trust in creating and reviewing your Life Plan. When they make a recommendation, it’s because they feel strongly it’s the right fit for you and your needs, in the life stage you are now and for the future.

Investing for your future

Our financial professionals work in a fiduciary capacity with our investment platforms. We value our relationship with you and work to maintain your trust. We look at the big picture and consider all aspects of your life regarding your personal financial situation.

We know managing your finances can be a full-time job. That’s why our Advisors are there for you to ensure your investments are properly diversified for your risk tolerance. We also monitor other service providers working on components of your plan (including investment companies, record keepers and third-party administrators) to make sure they are catering to your needs and in a cost-efficient manner.

Managing risk

Your fiduciary Financial Advisor will review your personal situation to determine where the risk factors are when it comes to protecting your wealth and recommend insurance products that best fit your needs to add peace-of-mind protection. Whether it’s long term care or life insurance – we’re here to set you up for success so you have a solid plan for whatever comes your way in life.

In keeping with our fiduciary commitment to you, we are an independent financial planning firm. That means we don’t own any insurance products. We’ve done the legwork to find reputable insurance companies who have a proven track record of financial security and claims-paying ability, so you can be confident we recommend products that have the credibility you can count on.

A partner you can trust

When you work with Trilogy, you can finally take a breath in knowing you have a partner who will look out for your finances and do what is best for your life situation and help you meet your financial goals. You can get on with enjoying life, not worrying if you have the money to cover it.

By
Mike Loo, MBA
September 28, 2017

The world of financial planning is so incredibly diverse. And so it is with financial professionals, as well. The challenge that most people have is that by not being familiar with the various types of advisors; styles, approaches, licenses, abilities, qualifications, etc., it makes it hard to know what questions to ask in order to formulate an opinion as to whom to work with. People tend to go with their “gut feelings” about someone. And while that certainly can be an indicator as to what kind of working relationship one might have with a particular financial professional, it is equally, if not more, important to have objective information at hand for that decision-making time, as well.

There are a few questions that advisors rarely get asked, but should be asked. Sometimes these questions get avoided because the person asking might not even realize these questions are important. Past experiences drive many of the questions people ask. But if the goal is to be as informed as possible, it’s important not to forget to ask these three questions:

Question #1: Are you a fiduciary? And how do you get paid?

Not all financial professionals are fiduciaries. There are various types of securities registrations a financial professional can acquire; some are simply registrations to sell certain products, some are registrations to give advice (as opposed to just suitable recommendations for product sales). In other words, some financial professionals are “Registered Representatives (RR)” who are affiliated with a broker/dealer, with some securities registrations that allow them to sell products. While some financial professionals are “Investment Advisor Representatives (IAR)” who are affiliated with a Registered Investment Advisory firm, who have a few more/different registrations that allow them to be fiduciaries within the advisory services they offer their clients. Some professionals are both a Registered Representative and an Investment Advisor Representative. Others are not. Many consumers don’t know the differences. Below is a very basic breakdown.

Responsibilities to Client:

IARs – Fiduciaries. Are legally bound to do what is in the best interest of their clients…above all else.

RRs – Are responsible for making sure the products they sell to their clients are suitable.

Primary Responsibility/Function:

IARs – Primary responsibility is as an advisor to their clients

RRs – Sell securities and handle sales transactions for their clients

Compensation:

IARs – Generally charge a flat % fee for advice surrounding assets under management (AUM)

RRs – Tend to be commission based. They get paid commissions for products they sell.

Compliance and Regulations:

IARs – Are associated with Registered Investment Advisory (RIA) firms that are regulated by the SEC and/or state regulatory agencies.

RRs – Are regulated by FINRA (Financial Industry Regulatory Authority), along with the SEC and other state regulatory agencies.

Question #2: What is your particular expertise?

Not all financial professionals have niche markets….or only specific types of clients that they work with. But it’s important to know if they do. Understanding what kind of experience and typical clients the advisor has is important to understanding what to expect from them in regards to knowledge and experience that is relatable. Knowing what kind of team they have, and what kind of experience the team as a whole has is important. What do they specialize in? What resources do they have access to?

Here are some examples:

Tax efficiency with investments

Protection Planning – Estate planning collaboration

Small business owners

Multi-generational planning

Etc.

Question #3: What is your ongoing service model?

Taking the initial steps to get things organized and onboard with a financial advisor can be activity-filled and very important. But equally important is the clear communication about expectations for moving forward. Understanding what to expect between the advisor and client is critical to insuring that communication and expectations are being managed positively for the relationship, from both sides.

How often does the advisor reach out to clients?

Is there a team to support clients? Or just one individual?

What can be expected in regards to calls? Meetings? Paperwork? Statements?

What method of communication is used? Phone calls, meetings, email, video conferencing, etc.?

How accessible is the advisor if the client has a question?

These are just a few questions that might prove important to ask when interviewing financial professionals. There is no generic right or wrong answer. At the end of the day, it’s all about understanding what the relationship would be, the expectations for the relationship for both the client and the advisor, and communication. Being logical with interviewing an advisor is critical…look for proof and conviction between what they say they do vs. what they can prove they do.

Our financial well-being is critical for empowering our lives….we work hard for the life we want. And there are almost always some form of financial element to all we do. So please, don’t be afraid to ask the intrusive questions of the advisors you are considering working with. It could mean a great deal to how life gets funded….now and through all ages.

Get Started on Your Financial Life Plan Today