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Steve Lynch headshot, Steve Lynch Wealth Management

Industry Spotlight > Advisors

The Key to Financial Planning That Most Clients Miss, According to an Advisor

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Financial planning: science or art? The answer is both. But most folks fail to do it correctly, certified financial planner Steve Lynch says.

The right way is to think of yourself as “a business, and every dollar is a worker,” says the president of Steve Lynch Wealth Management. “That’s the most consistent, reliable way of making money.”

He has written a new book, “Mind Your Own Business: The Final Piece to the Financial Planning Puzzle” (2022), a breezy, often humorous, guide to how individuals can build wealth by handling their money as if running a business.

In his practice, Lynch focuses largely on financial planning and behavioral economics. “We show [clients] a method or how they can save a lot,” notes the advisor, whose broker-dealer is United Planners Financial Services of America.

Lynch, a financial advisor since 1982 who launched his own practice 32 years ago, recommends buying in a down market. “The people that don’t are just going to have big regrets again and again,” he says. “They always wonder why they’re being left behind.”

The son of a World War II veteran, Lynch attended military school and worked his way up to becoming an officer in the Army National Guard. In 1990, as a reservist Army commander, Captain Lynch served in Operation Desert Shield after Iraq invaded Kuwait.

ThinkAdvisor recently interviewed Lynch, who was on the phone from Albuquerque, where his firm is based.

An issue we discussed was the difference he sees between what he terms “stupid tax” and “smart tax.”

It boils down to an analogy with amusement park rides that he cites in his book: “Which tax ride are you getting on?” he asks. “The one that makes you feel good or the one that makes you puke?”

Here are highlights of our interview:

THINKADVISOR: You write in your new book, “I never recommend running from a bear or a bear market. That’s a sure way to get bit in the ass.” How does your strategy apply to what’s happening in the market right now?

STEVE LYNCH: If you’re doing the right things, you’re taking advantage of what’s going on. If the market is down, you should be buying throughout the system.

The people that aren’t are just going to have big regrets again and again. They always wonder why they’re being left behind.

People don’t do financial planning correctly, you argue. What do you mean?

Let’s start with the name of my book, “Mind Your Own Business.”

So, “the final piece” to “the financial planning puzzle” is to mind your own business?

For sure. It’s much easier just to concentrate on the investments, but that’s not really it.

Think of yourself as a business, and every dollar is a worker. The difference between Al Bundy [debt-ridden shoe salesman on TV’s “Married…with Children”] and Bill Gates is that Bill Gates has a lot of people working for him — a lot of assets — and Al Bundy has only himself.

People need to think of themselves as a business, which is the most consistent, reliable way of making money.

Why don’t they think that way?

It’s not that they don’t understand economics and business; it’s that they don’t have the time. So they’re looking for heuristics [mental shortcuts without rationale] instead. Those are rules of thumb and where they get into trouble.

Eighty percent of an investor’s success or profit comes from financial planning, you write.

Eighty percent of your success is going to come from your behavior, and 20% comes from the “stupid” investments you make.

The spectacular thing about that is we can control our behavior. It’s a much more reliable and consistent way of making money as opposed to the other side, which is what most people do, like Jim Cramer [TV’s “Mad Money” host]: “Let’s buy. Let’s sell. Let’s buy!” Or they go to the cheapest things.

There’s a big void out there, which is why I wrote the book.

Your focus is very much on investor behavior. Please elaborate.

How many people out there are trying to figure out the best investments? There’s no shortage of great investments. But let’s talk about that behavior.

It’s how you understand things, how you understand that every dollar is a worker [for you] and how precious that worker is.

Please talk about how you differentiate “stupid tax” from “smart tax.”

The stupid tax is the ordinary income tax, the highest taxes. The smart tax you pay on capital gains [investments and savings].

How many people out there are working their butts off and putting their money into a 401(k) and then at the back end, they get killed with taxation on it — ordinary taxes are [at the rate of 37%] the highest, plus there’s state tax.

So you work to build your 401(k), and its supposedly a million bucks. Well, because of the [federal] tax, it’s really $600,000. That’s what you get to walk down the street with.

When I was growing up, my brother and sister worked at an amusement park, and I could ride any ride for free. It was great until you got dizzy.

So you have to watch what ride you get on because when you get off, bad things can happen.

You were in the military for many years. What inspired you to become a financial advisor?

I went to military school, came up through the ranks and became an officer in the Army National Guard.

I had a few months between graduation from Texas Tech University and reporting to the National Guard at Fort Belvoir, outside D.C.

One day when I felt bored, I went to a hiring seminar that IDS [now Ameriprise] had. At the end, I asked, “Do you have to sell IDS’s investments?” I was very green, but I knew enough that independence was very, very important.

They said, “Why don’t you come over tomorrow and take a test.”

I went for the test and even before they [scored] it, the manager said, “You’re hired!”

I wasn’t even looking for a job.

The point is that there are a ton of military people in financial services. This guy was a Vietnam vet. He saw my military background and wanted me.

In 1990, you served in Operation Desert Shield after Iraq invaded Kuwait. Please talk about that.

I was the company commander, a captain for an Army Reserve unit in Albuquerque that got mobilized for Desert Shield. I took 170 soldiers with me. Luckily, it turned out to be over really quickly, and I was back in business.

Please sum up your thoughts about the financial planning profession.

The name of the game is to make the best return with the least amount of risk.

Financial planners can’t make money on small investments, so they don’t try. They spend most of their time on [high-net-worth] clients.

So you have a huge population of over 200 million people in the U.S. that nobody helps. Most people are trying to be less poor.


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