Many times clients come to us because of something short term, something acute. While episodic planning can be beneficial, the real value in financial planning actually comes through preventive planning. We might think of this as wealth by design- intentional instead of accidental. If we can help clients avoid big pitfalls and big mistakes, this is much better than having to find solutions to already existing "financial fires".

We all know the adage "an ounce of prevention is worth a pound of cure". This holds true in many elements of life including the financial ones. It is more alluring, however, to talk about short term "solutions" which so often ends up as a packaged product (annuities as an example). The "solution" to the short term issue may actually inflame the long term problems but never the mind. In many ways the financial services system (banks, brokers, insurance etc.) is set up specifically NOT to address longer term preventive measures. That is precisely where we come in. We stress the need for setting up a structure for making goal focused long term decisions instead of "emergency" decisions that are often counter-productive.

Truly, financial goals can be quite illusive if we are merely "solving" very short term issues. Reaching and maintaining financial independence can be accomplished by avoiding a handful of common maladies that often appear out of neglect. Among the most important: 1. Understanding spending; 2. Avoiding "Position Size" or over-concentration; 3. Avoiding excess leverage. Controlling these issues (which are all within our control), will prevent chronic future financial problems. This WSJ article, "The Truth About Wealth" discussez each factor more deeply.  Ignoring these factors will likely ruin your financial future. It is just that simple. The stage for successful financial planning is set by what we do now.

We look forward to working with you in 2012. We are working to change the way you think about money and investing.

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In two weeks, we will discuss Wealth Sustainability Factors and how to maintain your wealth.