I’d never heard of Circle Financial or Ann Kaplan before reading this Businessweek interview, but I found myself bookmarking it for later as she gives a lot of unexpected advice that you usually don’t hear from a financial advisor. For example, let’s take “What’s the biggest financial mistake people make?“. I would say that the majority of advisors would focus on some part of investing as that is how they justify their fees. Something like “they should manage risk better, like I do with my smart-alpha-low-beta asset allocation system”. Instead, Kaplan’s response focuses on spending and priorities (emphasis mine):
The biggest mistake isn’t bad investment choices, it’s overspending. Most people are very surprised when they analyze their spending to discover that a lot of it doesn’t reflect their priorities. Maybe they’re eating out a lot when their priority is travel. Most can cut one-third of their budget by eliminating things they don’t really need, whether that’s buying jewelry or theater tickets. The goal of thinking about this isn’t to encourage you to necessarily cut back but to understand that you can. That helps eliminate fear.
I agree wholeheartedly. From another 2009 Forbes article :
“When we study what diminishes wealth, down markets and manager selection are not key figures,” says Kaplan. Instead, it is lack of diversification, overspending and borrowing too much. Build an effective checklist for your road to a healthy portfolio that includes planning, diversifying, monitoring investments, securing tax efficiencies and arranging for appropriate wealth transfer. “All these factors have one thing in common,” says Kaplan. “They are all things we can control.”
Even though she is a former Goldman Sachs partner (which at least to me suggests skill at ruthless profit-seeking), she focuses on the personal/social/behavioral aspect of financial advising and is known for exchanging advice in a group environment: