Message from the CEO - Lessons from the Launch
Hello FinGym Friends and Family,
As many of you may know by now, earlier this year, Financial Gym launched its investment subsidiary as a response to high client demand; and I have personally spent hundreds of hours over the last three months speaking one-on-one with our clients (past, present and future) about their investment portfolios and strategies. As a result of these conversations, there are a few common takeaways I want to share with you.
People (especially women) are generally under-investing. What do I mean by that? They are saving too much in cash. Cash is an asset class, but its purpose is not for high returns, it’s for security. So, clients who are about to buy a home or leave their job to go on sabbatical or leave their job to start a company should have their funds in cash. If your next big goal is not anywhere close to being on your radar, then you are actually losing money (to inflation) sitting in cash. I know how great it feels to see your high yield savings account earn 5% when it was previously earning close to 0%, but it was paying that much because inflation was 6-8%; however, now with inflation subsiding, and the Fed talking about lowering rates later this year, those high yield savings rates will start to drop as well. I love showing clients this chart, which illustrates historical asset class returns going back to 2009. Cash is in yellow and over this past 15-year period, it was only the top asset class performer two years out of 15 or 13% of the time. The key to financial independence is finding a way to save actively and invest aggressively. In general, clients sitting in too much cash will take longer to reach FI than those who are actively investing.
People who have worked with a financial professional linked to an insurance company need to take a hard look at their “investment” portfolios and determine if those portfolios may be delaying their journey to financial independence. What do I mean by that? We have reviewed historical returns on clients’ portfolios in whole life insurance plans and annuities, and the results are alarming but not surprising. I think there is a purpose for insurance products in wealth planning, but I don’t typically see the need for those until clients are over 50 or if we have to worry about planning for estate taxes. The large majority of our clients are between the ages of 27 and 36 so having the funds of their wealth-building years in these products is not something we would recommend.
People who have worked with any financial professional need to review their portfolios. Now that we are managing our clients’ assets, I say that we’re “driving the car” as far as their investments are concerned. Some of these clients have had someone else driving the car, but I’m not sure that previous driver had the client’s best interest in mind. Most people are not financial professionals and are not equipped to properly review their own portfolios, but we’re happy to help and give feedback. At Financial Gym, everyone on our team subscribes to and is reviewed on the way they live our Core Values, and it's our Core Values that I believe make us such a unique addition to the wealth management industry. Our Core Values include Magic (we believe in our client’s unlimited potential to achieve their goals) Empathy, Our Team, Community, Gymsplaining (educating people in a way they will understand), Our Advice and Inclusivity. If you’re working with another wealth management company, I encourage you to ask your CFP, financial planner, or financial advisor what their company’s core values are. Do they align with yours?
People who are investing in robo-advisers or target date funds should also review their investment portfolios, especially against other investment products available to them. We have performed portfolio reviews for numerous clients in both and found that frequently the client’s asset allocation strategy was not aligned with where the client should be as far as goals-based planning is concerned.
All of this is to say that none of what we’ve seen is necessarily illegal, unlawful or incorrect, but I do see the opportunity for clients to refine their investment strategies and make changes to better align with their goals. The number one goal of clients of Financial Gym is financial independence (the ability to work because you want to work and not because you have to work) and planning for FI looks much different than planning for retirement. I tell clients that we’re FI planners not retirement planners, and FI can be achieved at any age or stage of life.
If you are a previous or current Financial Gym client, our advisory team is offering a free portfolio review to help you optimize your FI strategy. We worked hard together with you to set you on the right path, and we want to make sure you’re still on it. If you are not a Financial Gym client but want an honest and constructive assessment of your FI plan, we are providing those reviews for $275 for individuals and $500 for couples. If you are interested in an investment portfolio review, please email advisory@fingyms.com or email your trainer at Financial Gym to schedule one today. Don’t let what could be the wrong investment strategy for you slow down your dreams of achieving financial independence.
PS: Attached is a copy of our most recent ADV so you can find out more about our investment subsidiary.
Cheers!
Shannon McLay
Founder & CEO
The Financial Gym & FG Advisory Services
FG Advisory Services LLC ("The Financial Gym") is an SEC registered investment adviser. Additional services may be provided by The Financial Gym INC. FG Advisory Services and The Financial Gym INC are separate but affiliated companies. The Financial Gym’s investment advisory services are available only to residents of the United States. Nothing in this email should be considered an offer, recommendation, solicitation of an offer, or advice to buy or sell any security. The information provided herein is for informational and general educational purposes only and is not investment or financial advice. Additionally, The Financial Gym does not provide tax advice and investors are encouraged to consult with their tax advisor.
All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Brokerage services will be provided to The Financial Gym clients through Fidelity Brokerage Services LLC, (“Fidelity”) SEC-registered broker-dealer and member FINRA/SIPC . Securities in your account protected up to $500,000. For details, please see www.sipc.org.
Please be advised that the investment advisory services and the securities offered: Are Not FDIC Insured; Are Not Bank Guaranteed; May Lose Value; Are Not Deposits; Are Not Insured by Any Federal Government Agency; Are Not a Condition to Any Banking Service or Activity Any investment , trade-related or brokerage questions shall be communicated to advisory@fingyms.com.