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Joe Pitzl, CFP®, is a Principal at Intelligent Financial Strategies, LLC in Edina, MN. He believes that money makes an excellent servant in life, but a horrible master. His mission is to help people make sense out of the nonsense they are inundated with on a daily basis. Success in the financial planning process results in faster, more confident and more purposeful decision-making within your personal economy, so that you can focus more time and energy with the people and projects that inspire you.
Intelligent Financial Strategies, LLC is an independent and fee-only financial planning firm dedicated to helping busy, intelligent people coordinate their financial life. Fee-only means that the only compensation we ever receive is that which we agree upon. We accept no commissions from outside providers, resulting in a sole allegiance to our clients.
MO: Why have you chosen center your investment philosophy and financial planning processes from the book “The Intelligent Investor”, written by Warren Buffett’s mentor, Benjamin Graham?
Joe: The Intelligent Investor simply takes us back to the roots of what investing used to be before the stock market was turned into a casino. The principles outlined in the book are critically important to a successful long-term investment plan, and also provide a framework for successful management of our household financial affairs.
The entire financial services and retail industries are designed today to stimulate our emotions, because as we all know from sales training, stimulating emotions creates action. And when these industries succeed in creating action, they win. To succeed in the realm of investing, you must resist the urge to jump into Wall Street’s game.
The Intelligent Investor reminds us of the importance of removing emotions from our decision-making process. It discusses the need for us all to create and be comfortable with margin in our financial (and personal) lives. It instills the notion that being approximately right is better than running the risk of being precisely wrong. It reminds us that stock is really ownership in a business, not a piece of paper, and the market merely tells us the price we can buy or sell that business for in a given moment. It does not tell us that company’s real value. And it is the cornerstone of the philosophy that Warren Buffett has used throughout his legendary investment career.
MO: Can you expand on your systematic planning process centered on client’s unique money personalities? Could you provide an example of how you would use this personality profile to help create an ideal financial strategy for a client?
Joe: No person has a single money personality that drives their financial behavior and decision-making. We all have several, which can often lead to conflict. Further, when you bring two spouses together, an entirely new set of personalities enters into the equation, resulting in far more complexity and conflict that it appears on the surface.
We identify money personalities using the work of a psychologist named Susan Zimmerman. She has identified eight different characteristics that are commonly found in people: Flasher (a preference to have the look of success), Rasher (impulsive…ie. something is on sale, so buy 2!), Clasher (always in conflict…buy something and immediately regret it, or vice versa), Dasher (too busy to deal with money), Basher (may believe they don’t deserve it, or perhaps that money is bad), Asher (constantly worried about money), Casher (desires order, structure and a clear picture of where things are going), and Stasher (growth investor, or perhaps a risk-taker). None are good or bad, they simply explain how we are wired and react to financial stimuli.
Depending on the characteristics of the client, it can provide guidance on how advice should be delivered. A Dasher, for example, must attempt to automate as much of their financial life as possible, while a Casher may have a really hard time living through the ups and downs of the market. It becomes more complicated when you combine characteristics. A person wired as a Casher and Stasher will often be in conflict because the Stasher requires investment growth, while the Casher characteristic will experience anxiety any time their investments decline.
MO: Can you expand on your collaborative approach to financial planning?
Joe: The traditional model of financial planning involves obnoxious financial projections based on numerous assumptions (ahem, guesses) that we all know are not going to be end up being accurate. Instead of preparing people for the uncertainty that lies ahead, products are sold that promise to eliminate uncertainty from people’s lives. This is not only counter-productive, but it is impossible as well. In the name of eliminating uncertainty from the obnoxious model they are being presented with, people are actually being led to increased risk if the assumptions turn out to be incorrect.
MO: Why is effective communication so critical when putting together a successful financial strategy?
Joe: One of the most critical roles of the financial planning professional is helping each person identify the WHY’s of their financial life. We ask a lot of questions that people have never been asked before, especially in a financial meeting. The more clarity we can get around the client’s life purpose, the easier it becomes to design a financial system that will work for them and that they can connect with. And the easier it is for them to connect with it, the easier it is to ignore the nonsense they get bombarded with in their day-to-day life.
MO: What influenced your major decision to rebrand your firm, upgrade the technology and completely overhaul your service model?
Joe: We acquired a firm that was built about 17 years ago and never really changed. It was a very lean operation that provided very elementary investment management services and no financial planning. My partner and I believe that any sound investment plan must be designed to support our client’s financial life, and not the other way around. In addition, the philosophies we wanted to bring to the firm required a change. As such, to deliver the service we wanted to deliver, we had to change everything. Fortunately, the firm was not reliant on any particular systems to run, so that process has been a lot easier than it sounds.
MO: Why do you think that the financial industry is stale and broken?
Joe: 2008 made it very clear that the financial services industry is not the consumer’s friend. While they provide us with necessary products and services, it is evident that we must proceed with caution. In medicine, we learned long ago that it was important to separate the service providers from the product manufacturers. While there are a growing number of firms like ours that have elected to do this on our own, we have a long ways to go.
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