Wealth Clarity Blog

In a recent post titled Moving from Success to Significance, I wrote about some of the key considerations when shifting your life from a journey of success to a journey of significance.  Making this shift requires action, but unfortunately, many wealth creators get stuck along the way.

The major barrier to a life of significance is Complexity.

Two Challenges of Complexity

First, wealth—especially increasing wealth—will naturally create a heightened level of complication in your life.  You tend to worry more, have less time for the things you truly love, and desire more control and simplification.  But, at the same time, you aren’t sure what options you have that will allow change to occur.  

Secondly, when you’re in the middle of wealth complexity you don’t know what you’re missing: you can’t see it. 

The base that will allow you to fully experience significance is Wealth Clarity.

In many ways, wealth clarity is the bridge that crosses the chasm from complexity to simplicity.  It frees you to think and to enjoy life in a more meaningful way.  It builds confidence because you can manage your financial life more easily and respond to changing assumptions and life circumstances in stride.

The sad truth is that 90-95% of wealth creators live a life of wealth complexity. 

In my next post I will focus on the consequences—impacts and costs—of not having clarity and what you can do about it.

I have written previously about the fact that we are all on our own unique life journey – one that presents us with choices that influence the direction and outcomes that we are seeking. 

Wealth creators are intimately familiar the part of the journey that is focused on success, and particularly financial success.  However, most wealth creators don’t understand how to shift their lives from a journey of success to a journey of significance.  They want to have an impact and see positive change in their lives and the world, but many times don’t know what steps to take.  They even talk about wanting significance in their lives but very few people actually take action.

I recently moderated an event that was co-sponsored by Highland and Social Venture Partners, a Seattle-based network of engaged philanthropic donors, titled “How to Identify Your Ideal Outcomes for Philanthropy & Gifting.”

I have included a short video clip that describes what I’m talking about.

The evening provided five powerful insights that can shift your life path towards more significance and impact: 

1. Action is required.  It takes courage to move from a position of talking about significance to doing something about it. 
2. Alignment is key.  Aligning your values, passions, beliefs, and unique gifts to your money and your business pursuits is an important step in creating energy and momentum towards your ideal outcomes.
3. Use money as a tool, not a solution.  Writing checks is important, but it can also create avoidance or distance from exploring your maximum impact on the world.
4. Adjust as you go.  The journey doesn’t need to be fully vetted before you start.  Learning and adjustments will occur along the way and this is part of the process.
5. Be open to unexpected opportunities.  These are often the most rewarding experiences of your philanthropic journey.

 What if more wealth creators took action towards significance? 

 In another post, I am going to expand on what causes wealth creators to get stuck on their journey towards significance. 

You have likely heard that 80%+ of portfolio returns come from asset allocation strategy or the way you diversify your investment assets.

So, naturally, lots of wealth managers spend a great deal of time carefully considering how to allocate portfolios for the “long-run.”  That kind of strategic thinking is important and if it’s done well then a portfolio has a greater potential to achieve its objectives over time.  However, we learned over the difficult past 18 months that long-term thinking did not eliminate volatility and preserve capital.

But, no one said that “strategic asset allocation” only applied to the long-run (3-5 years).  Tactical, or short-run (3-6 months), thinking provides the opportunity to respond to news and a changing market environments.  The tactical approach lets investors stay flexible and gives them a chance to verify that their initial thoughts on the market are playing out as expected and make the necessary adjustments that can enhance the outcome.

Being successful requires striking a balance between strategic (long-run) and tactical (short-term) thinking.  Both are valid, and both serve the needs and objectives of the portfolio.  The strategy provides an anchor so the tactics don’t stray too far or get taken to an extreme where they may be viewed as market timing; meanwhile the tactics help to take advantage of immediate, forward-looking opportunities that the strategy might miss completely because it tends to be focused on historical data.

The financial markets may be in a period of increased volatility without any clarity of information.  This can be a very difficult environment to stay locked into a static, long-term strategic allocation.

Key insight:  combine strategy and tactics for better results.

It’s the same 80%+,  and it takes more skill and focus, but the time required can be worth it.  The skill necessary to provide tactical insights will prove to differentiate wealth management firms in the future.

Is this just nuts or can the outcome of the Super Bowl this Sunday actually predict the stock market direction for 2010?

The Super Bowl Indicator says it can.  The indicator has been amazingly accurate (it’s right about 80% of the time) – not bad for something without any apparent connection to financial markets.  Of course, we have to admit that the indicator isn’t the most, shall we say, “rigorous” method of forecasting available.  I certainly wouldn’t bet my lunch money on it.  Even so, it’s fun to talk about along with the halftime commercials.

As an aside, I was lucky enough to see the 2005 Super Bowl live in Jacksonville, Florida.  That year, Tom Brady led the New England Patriots to a win over the Philadelphia Eagles.  As a sports fan myself, it’s definitely something I would recommend to other sports lovers just to partake in the spectacle of it once during your lifetime.

Basically, the indicator predicts that if a team from the old AFL (now the AFC division) wins, the markets will fall.  If a team from the original NFL (now the NFC division) wins, the markets will advance.  To be fair, there are plenty of criticisms and reasons not to use this as a decision-making tool.

In any case, that takes us to this Sunday’s Super Bowl matchup: the New Orleans Saints (NFC champs) will face off against the Indianapolis Colts (AFC champs) for all the marbles.  In the hopes of seeing rising markets, it looks like I need to root for the Saints, right?  Hold your horses (or just your colts)!  The indicator makes the prediction based on original NFL teams; the Indianapolis Colts were formed in Baltimore, Maryland in 1953, so they were part of the original NFL.

What luck! Both teams are from the original NFL!  For those of you keeping score at home, that means the Super Bowl Indicator will predict an up-year in the markets!  (Please, don’t take this as a recommendation to go do anything!)

Well, good to have that settled.  Now when Sunday comes around, I’ll be able to kick back, eat more than I should, and just enjoy the game. 

Go Super Bowl!

Just for fun, here’s a quick poll:

A few years ago, I found a new way to think about my goal setting experience that felt totally different and unique from the Ideal Outcomes discovery process and prior blog posts on life planning.

Actually, it was easy and fun, and it has yielded amazing results: 

it’s called My Life Story™.  (You can also find this in the blog Learning Center)

Goals are important, and New Year’s goals are particularly important.  They represent what you choose to experience in your life for the year.

And, yes, we have the ability to make that choice even though we don’t fully control everything that will happen to us. 

Going through the goal setting exercise creates power by becoming a guiding light for your life on both a conscious and subconscious level.  But frankly, goal setting is easy to ignore and put off because we usually associate the process with some sort of business strategic planning (i.e. specific, measurable, results-oriented goals).  We get busy and before you know it the year is gone and the opportunity has been missed.

So, find a quiet space this week and get to it!  You won’t regret it.