”Simplicity is the ultimate sophistication.” Leonardo DaVinci
At Dolan Partners, a central philosophy is to inject simplicity, and over time radical simplicity, into our clients’ financial lives. Simplicity doesn’t mean handing off responsibility for our finances, it doesn’t mean dumbing it down, and it doesn’t happen quickly or without effort. Rather, simplicity, as the English historian Frederick Maitland said, “is the end result of long, hard work, not the starting point.”
We start new clients with the building blocks of simplification. At the outset, we “Marie Kondo” their financial lives. As the home organizing guru explained: “The point of the process isn’t to force you to eliminate things, it’s really to confirm how you feel about each and every item you possess.” We do a robust spring cleaning, closing and consolidating accounts, and determine if there are any account types that are missing (typically tax-advantaged). The higher the number of unnecessary accounts, the greater the likelihood that the client has little grasp of their overall spending, cash flow, investment risk allocation, or progress towards goals. They are too buried in statements, websites, tax forms and confusion. We aggregate the slimmed down list of banking, investment, and spending accounts into our intuitive web-based planning portal, which allows a client to understand their entire financial life in real time. Less confusion and stress, more focus.
Next we assess any obvious unaddressed priorities. Typically, a couple issues will jump out. A 42 year old, high-income client with young children who appears to have a material life insurance gap given his circumstances. Or a 55 year old with considerable assets, will be missing several key estate planning documents. Or perhaps a 59 year old client doesn’t have a healthcare power of attorney. Typically, the client has known subconsciously that he needs to take care of these issues, but for whatever reason, hasn’t taken action. It’s like the friend of mine who hasn’t had a physical in 10 years. He knows he should, he knows he is being irresponsible to himself and his family, and he knows he should have done it years ago. Inertia, rationalization and avoidance, keep him from doing it today. We make sure this doesn’t continue. Increased security, less anxiety.
After these initial steps, clients typically feel engaged and energized to push the process forward. It’s at this stage that we move toward building radical financial simplicity. Radical simplicity at Dolan Partners means many things. Here are a few:
It means clarity: having a crystalline view of your financial journey: where you’ve come from and where you are going. You understand your financial strengths and weaknesses, you’ve identified your financial priorities, goals and transitions, and you understand the path and behaviors which will allow you to achieve them.
It means trust: your life can be so much easier if you surround yourself with people you completely trust. Berkshire Hathaway, despite having nearly 400,000 employees, has no human resources department, no general counsel, and doesn’t allow its directors to have liability insurance. Charlie Munger explained, “A lot of people think if you just have more process, you could create a better result. Berkshire, has had practically no process. We just try to operate in a seamless web of deserved trust and be careful whom we trust.” We strive to minimize unnecessary process, and instead work to earn a deep reservoir of trust with our clients over years and decades. Working only with people you trust is a key part of keeping your life simple.
It means focused rationality: understanding and concentrating on the core tenets of what works in planning and investment, and ignoring the ocean of financial distraction, fads and superficiality that doesn’t. You embrace the fact that while the main ideas are simple, its human behavioral issues which trip up most people. We focus on not falling into those traps.
It means transparency: the process must involve all key constituents, typically both spouses. By creating a platform for both spouses to be heard, not just the financially dominant one, we unearth areas of agreement, and often a few long-simmering resentments and frustrations. Only when all the key players feel heard and have a hand in decision making, can we drive long-term sustainable progress.
It means adaptability: your life changes everyday, in mundane ways and profound ones. Our clients know that while their plan’s bedrock ideals are timeless and unchanging, the process is also pliable and adaptable to tack when their life tacks. The process is proactive in anticipating change, and works to reduce reactivity.
It means balance. It doesn’t always come naturally for clients to delay gratification, or make smart financial or investment choices. We understand this, and strive to strike the right balance for each client in a way that fits their life, while working to strengthen the areas that need bolstering.
Radical simplicity ultimately means serenity. To build a rock solid foundation of financial security and freedom, which allows you to live the life you want, protect and provide for those you care for, and confidently know you can handle whatever life throws at you. The result is clients with a level of confidence and equanimity in their financial life, that allows them to focus on what really matters to them.
If you feel like your financial life has become unfocused and distracted, which leaves you with a gnawing sense that you need to address it, schedule a call with us. We can give you a quick, no obligation assessment of our thoughts and whether we can help. Take action today. Learn more at www.dolanpartners.com