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Opinion

Reaching your financial goals, by GPS

New book aims to help us navigate our way to prosperity

Hey there, time traveller!
This article was published 4/11/2017 (941 days ago), so information in it may no longer be current.

If life is a highway — as Tom Cochrane once noted in song — a new personal finance book hopes to serve as your GPS to reach your destinations with as few bumps and detours as possible on this decades-long road trip.

‘Recalculating: Find Financial Success and Never Feel Lost Again’ is written by veteran personal portfolio manager and frequent BNN panelist Darren Coleman.

The book aims to take the often complex and confusing concepts of financial planning and investing and make them understandable to average folks like us.

Coleman’s literary vehicle (pun intended) to accomplish this is using the GPS navigator in your car as a metaphor for financial planning.

"It’s an amazing technology because we’re never lost," says Coleman, a certified financial planner with Raymond James in Toronto, in a recent interview with the Free Press.

"All we need to know is our destination and the route to get there, and away we go."

Make a wrong turn, or need to take a detour — which happens often in life — and the GPS recalculates your path toward your destination.

"That’s a similar process we take our clients through now with financial plans."

Coleman says financial planning is a constantly evolving profession. In the industry for more than 25 years, he was around when it was first "becoming a thing."

A lot has changed since.

In the ’90s, for example, the go-to source for many was The Wealthy Barber — a seminal book in Canada’s personal finance landscape written by David Chilton (a former ‘dragon’ on Dragons’ Den).

"Its aim was to explain to baby boomers who were becoming adults and getting married, having kids, buying life insurance and purchasing minivans how to balance and juggle multiple and competing financial objectives."

Before The Wealthy Barber came around and financial planning became a thing, no one was tying all these needs together. Instead, different financial goals were addressed in isolation, Coleman says.

"If you wanted life insurance, you went to an insurance guy — or more accurately he probably came to your house and sat on your couch until 10 at night."

More than anything, financial planning aimed to help boomers accumulate wealth for retirement.

Coleman argues the financial industry has been slow to adjust to the new landscape after being so focused for so long on helping Canadians build investment nest eggs.

Moreover, despite the best efforts of the industry and government, most people still have limited financial literacy. I

t’s not that we’re fools. Rather, managing our finances has become increasingly complicated, Coleman says.

"And nobody wants to put their hand up and say ‘I don’t know what I’m doing.’"

In this respect, Coleman says his book aims to do what GPS technology has done for the road trip. After all most people didn’t like asking for directions when they were lost before GPS came around. And thanks to GPS, now they don’t have to.

Similarly, Recalculating answers many of the questions average Canadians might have been afraid or embarrassed to ask about their retirement plan and investments. As such, it’s essentially a financial self-help book that’s written as plainly as possible — by an industry insider.

Although published last year, Recalculating is only now being actively promoted — and frankly Coleman couldn’t have picked a better time, with November being Financial Literacy Month.

It is indeed a book that helps people learn the basics. But Coleman says it should be especially helpful to certain groups of Canadians.

Among them are young adults starting out with their first job, shacking up (possibly making it official with marriage), buying a home and having kids. Recalculating covers the core fundamentals about budgeting, financial planning and investing that can help millennials navigate themselves along the road to financial well-being.

"It’s also advantageous for people on the cusp of retirement because life is changing rapidly for them."

For one, many boomers must wrap their heads around unwinding their savings, pensions, etc., to create a sustainable income. But often their lives have changed significantly too. They may be divorced or widowed, for example.

"One of the things we often see is a significant imbalance of how couples drive (financial speaking)," he says. "One has usually been driving the whole time and the other has been on the passenger side."

In other words, one has been managing most of the finances while the other has handled other tasks.

In this respect, Recalculating is a good starting point for people who now have to take the wheel with very little experience.

The book also is useful for those in new relationships and uncertain about each other’s financial literacy.

"This can be helpful in sharing the same metaphors and ideas to equalize a possible imbalance of financial knowledge and comfort with concepts," he says.

Indeed Recalculating is jam-packed between its covers with relatable driving metaphors to make financial planning and investing more accessible.

Consider its approach to investment portfolio construction, which Coleman compares to different types of automobiles.

"Do you manage yours as a classic car or a modern car?"

Coleman says classic cars require a lot of maintenance and tinkering — great for the hobbyist. Managing your own portfolio is much the same. It takes a lot of work. Moreover, like a classic car, it might not be as suitable as other options for more challenging goals.

"It’s all fine and good to have a vintage car, but I don’t know if I’d want to drive my family to California in it," he says.

Instead, the majority of people prefer a modern vehicle with all the latest conveniences and safety features. Modern portfolios are much the same. Most individuals don’t want to have to tinker with their investments and constantly watch of them.

For that matter they often don’t have the skill-set. So they hire financial planners or portfolio managers to do it for them.

"It’s the same way that if you have a car that has been built in the last 10 years and you pull over and open the hood, apart from changing the windshield wiper fluid and checking the oil, you can’t really do anything anymore."

As a portfolio manager, it’s no surprise Coleman urges people to seek professional advice. And honestly, in most cases people are best off doing just that.

But that doesn’t mean handing over all responsibility without understanding much about what your adviser is doing. That’s a recipe for disappointment, or worse.

Recalculating can serve you well here too, helping build a basic foundation of knowledge so you can have more meaningful experiences when meeting with planning and investment professionals.

Yet more than anything, Coleman says he hopes Recalculating connects with readers.

It should because it’s accessible (though it could use an index).

And it’s an easy read infused with lighthearted humour throughout.

"It’s aimed at making people smile or chuckle a little along the way, and hopefully, they get some wisdom from it too," Coleman says.

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History

Updated on Saturday, November 4, 2017 at 8:47 AM CDT: Photos added.

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