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Wealth Actualization White Paper


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Authored By: Garrett R. Morgan, CFP. This paper outlines our philosophy on wealth and its place in your life. What got you where you are is very rarely what is needed to get you where you\’re going. Take the next step and take a quantam leap forward.

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Wealth Actualization White Paper

  1. 1. FOUNTAINHEAD WEALTH T H E P U R S U I T O F W E A LT H AC T UA L I Z E D white paper: Wealth Actualization
  2. 2. What Money Is Money is energy. In our daily life we use money to get the things we want without thinking about what the money represents. The currency we earn from our effort and energy are merely a placeholder for that energy, sitting idle waiting to be deployed. The number of ways in which we may put that energy to use are seemingly limitless. Money allows the energy produced by our life’s work to be shared with others. It needn’t even be exchanged directly with them. Others can provide us with goods or services we need and the dollars we pay to them can be used to buy someone else’s energy, and so on. In this way, our energy ultimately comes back to us in this exchange. UNDERSTANDING THE QUEST Have you ever felt as if the quest for financial success was more of an obligation or chore rather than a deliberate and purposeful mission? When we meet someone for the first time in our office it is not uncommon for that first meeting to be marked by a high level of anxiety and fear. These emotions are typical because the familiar way of interpreting financial success for most of us is through the lens of our bank balance or personal material assets; we’ve been programmed throughout our lives to see our success or failure as relative to others and not absolute. During our first few hours with someone who has asked for our assistance, we work hard to keep them focused on “what money is” and what it is supposed to be about, as their natural tendency to focus on the “bottom line” of the financial picture and to get answers right away often distracts us from focusing on the mission. The “bottom line” is important, of course, but isn’t there more – a lot more- to life and wealth? We believe there is. The commitment that is required in this new paradigm is a big one. It requires one to reevaluate the means and methods that got them where they are. It is important to remember that what got you where you are is very rarely what is needed to get you where you’re going. Many are not willing or able to take this step and make this commitment but those who do begin to see opportunities unfold that they never even conceived. What got you where you are is very rarely what is needed to get you where you’re going. When you begin to see money and the accumulation of wealth for what it is and was always meant to be, the reaction can often be profound, even emotional. Many have found this process to be the turning point in their financial lives and the beginning of journey where they are in control. This process is different; it has to be. ENDOWED BY OUR CREATOR The basic human attributes which lead to our tendency to view our financial position as a means of comparison to others have been widely observed. Although we don’t know whether this effect is congenital or cultural, we know well that it exists. One of the most striking examples of this is the “endowment effect.” The Endowment Effect is the human tendency to place a higher value on something when we are the seller rather than the buyer. In other words, we think something should be worth more simply because we own it, even though we would not be willing to pay that same amount if we were the buyer of the object instead of the seller. 2
  3. 3. We place little value on money and far too high a value on what that money will buy. Interestingly, we place little value on the tokens (money) which represent the amount necessary to buy that same thing. Put differently, even though we have very specific ideas about how much item X is worth in terms of dollars, we have no aversion to letting go of the tokens or monetary symbols required to purchase the item. We simply place a higher value on objects over money because we believe those objects are representative of our success and an even higher value on those objects once they become ours. There is a common view that we place too high a value on money, when in fact we place little value on money and far too high a value on what that money will buy. BUY EXPERIENCES, RENT THINGS When was the last time you looked through a box of old photos? Did you immediately get the sense that you were being transported to another place and time – that exact place in time? Pictures seem to have a singular and universal ability to thrust us through space and time and evoke feelings – very real feelings – of passion and love and joy and warmth. Pictures are still frames from the movie of your life. Have you ever had someone tell you about their very first car? What do you remember about their tale? Was it full of specifics about the car itself or details about how it performed? Perhaps. More likely though, it was rife with all the great memories associated with that car like a first date or first big road trip. The story undoubtedly filled you with a feeling of unbridled freedom in the teller at a seminal point in his or her life. The car, special though it may have seemed, was not the end but the means to the end. Despite the fact that we place such a high value on the things in our lives, it’s the experiences that matter. Experiences live forever, not only in pictures, but in the stories we tell our children that they share with their children, and so on; in the memories we create with people we care about and with whom we live them. Objects eventually crumble away to be forgotten forever. Experiences are profound and eternal – the things in our lives are merely rented. Experiences are profound and eternal – the things in our lives are merely rented. 3
  4. 4. What Does Wealth Mean to You? The problem with the common view that money or wealth is something to be achieved is that it gives us no framework for understanding the purpose of our life’s work. If having more money is always better, then wouldn’t even more be even better? Wealth without context is meaningless. BEGIN WITH THE RIGHT QUESTION Have you ever asked yourself if the money you have will ever be enough? The answer to that question is another question: Enough for what? Living in a state of object referral where we use things or circumstances as the focal point of our lives is problematic. First, we have no control over things or circumstances: financial markets, the flow of traffic on the interstate, the opinions of others; these are all things that lie beyond our control. Second, the amount of stress and insecurity that comes from the “more is better” object referral mindset is limitless (there will always be a better car, bigger house or boat). There is NEVER a resolution. The treadmill effect that comes from pursuing money as an end unto itself is exhausting and unfulfilling. The pursuit of financial success alone rarely yields happiness because we have no objective standard by which to gauge that success and are simply left with comparisons with our family, our friends and our coworkers. Achieving lasting and meaningful wealth starts with the most basic of principles: money is not an end, but a means to an end. CHOOSING THE RIGHT FOCAL POINT Our practice is built around the accumulation and effective management of financial wealth so it may sound strange then to hear us decry a “more is better” mentality. To be clear more is better when the more is centered on a reference point that is deeply meaningful and not simply a method for keeping score. When your quest for success is wealth based and not object based, you’ve now begun to build your financial success quest on a foundation that is immovable. Your success has now become unbounded and limitless. Wealth = abundance. The word “affluent” comes from the Latin affluere meaning to flow to. The very words we use to describe wealth denote the significance of capital as a form of energy. Abundance is achieved not through storing your financial energy, but from deploying it with purpose and watching it come back to you more powerful and more significant than ever. If we treat money like what it is, the accumulation of energy, we begin to understand how wealth is manifest and multiplied. Energy of any kind demands constraint. Financial energy is a brilliant servant and a lousy master. By converting our human capital into financial capital, our financial capital into abundance, and that abundance into the fulfillment of our most treasured principles, we change not only our path, but our life and the lives of those most important to us. GAINING CLARITY You’ve probably felt before that feeling of being on the ‘treadmill’ of financial success. You keep running and running but are never any closer to reaching any meaningful goal. 4
  5. 5. By making the inputs of our financial lives – 401(k) savings, insurance premiums, account balances – secondary to the core values that underline why we endeavor at those things in the first place, we align ourselves with ideals about which we can achieve perfect and unwavering discipline. It is a standard which we alone define and is therefore the empirical basis by which we judge our success. We achieve clarity. In gaining clarity, those we help begin to find a kind of bliss about finance they never thought possible. Their effort and energy take on new meaning as these efforts become the lifeblood of something truly great, something significant. This clarity is so rarely achieved that the sense of fulfillment and accomplishment can be overwhelming at first. Over A : understanding what is important to you and being mindful of the principles which you believe to be absolute A : the belief that by achieving the kind of abundance that comes from the alignment of higher principles that you become a more powerful force for positive change in your own life and the lives of others A : the clarity of thought that comees from putting your plan in writing and sharing it with those who are most important to you A : the discipline to stay focused on your values, never losing sight of the fact that the values are the quest, the wealth is simply the source of energy A : having an objective gauge for measuring success as you define it, taking care to ensure that the means do not become the end time, those that experience it find themselves unable to resist the urge to share with others what they’ve discovered. The process becomes contagious and spreads like fire. Abundance becomes a limitless gift for those who choose to take the steps toward its attainment. PERFECT ALIGNMENT The breakthrough in understanding what wealth means to you comes by achieving perfect alignment. Alignment of… The perfect alignment of “the 5 As” is the tipping point. The financial issues of your life, once properly arranged and contextualized, begin to blend seamlessly into what could more accurately be described as a concept or philosophy of wealth building, rather than an old-style, goals-based plan. The advantage? The philosophy that governs the accumulation of wealth in your life never has to change even when your circumstances do. The perfect alignment of Wealth Actualized paradigm is, always and forever, more than the sum of the parts. The perfect alignment of “the 5 As” is the tipping point. 5
  6. 6. How Does Your Wealth Serve You? “Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t much care where –” said Alice. “Then it doesn’t matter which way you go,” said the Cat. Are you using your money to make a life? Or, are you using your life to make money? The movement away from the financial security paradigm and toward the wealth paradigm is a lifelong journey. Before that journey begins, you need first to understand where your journey is supposed to take you. Deploying wealth “with purpose” means endeavoring to lead a life of significance by organizing your life around one or more main focal points – your values. In the wealth paradigm the money serves us as a resource, rather than we serving it as a goal or objective. Achieving goals or objectives of any kind, not unlike the pursuit of money itself, rarely produces the kind of happiness we expect, as the reaching of one goal or objective always leaves us wondering “what’s next”. But what if instead of asking “what’s next” we stopped, took a step back and asked “what’s it all about”? What if we allowed the best and most gratifying uses of our time, talent and resources go to work for us? When we take actions for the express purpose of adding meaning and value to our own life and the lives of those around us we create a kind of structural tension that cannot sit idly. The tension presses upon us on a daily basis to go forward and move toward resolution, toward meaning, toward our values. THE ONE-EYED KING In the land of the blind, the one-eyed man is King. In the world of finance, the one eyed financial advisor is as difficult to spot as he is dangerous. The most common question we get asked at workshops or by friends or family is “how do I know if my advisor knows what he/she is doing?” The better question is “does my advisor know what I’m doing?” In the land of the blind, the one-eyed man is King. The core of why advisors don’t spend as much time as they should becoming familiar with the more important aspects of their clients lives is two-fold. First, the amount of personal inertia that has to be overcome for a client to leave their advisor is high. Advisors know it is unlikely you will seek to replace them unless there is a clear and compelling reason to do so. They also believe (falsely) that their business growth goals are best served by spending their energy acquiring new clients rather than developing deeper and stronger relationships with existing clients. In fact, it is far more profitable (and rewarding) to focus our energy on maintaining more meaningful and substantial dialogues with those we already serve. The second, more disturbing reason is that few advisors have ever done this kind of life re-visioning for themselves. How then could they be expected to help you navigate such deep and swift currents? The business model by most financial professional advisors, and indeed the industry as a whole, is that more is better. 6
  7. 7. THE MISSION Any successful mission HAS to be organized into five parts: VALUES CONCEPTS ST TEGIES TACTICS ACTIONS Our experience has shown that most people view this continuum entirely backwards. They evaluate their current actions to see if a change in tactics would result in a better overall strategy etc. Occasionally, the continuum, though backward, aligns correctly (purely by chance) and the result is something resembling the fulfillment of a core value. But aren’t the most important aspects of our lives too important to be left to chance? In the Wealth Actualized approach to financial and life planning, your values are always first. Every Concept discussed or conceived has as its singular priority the fulfillment of one or more Values. Every Strategy is designed around developing a plan for bringing even the more complex aspects of financial planning to life. The Tactics (or what needs to be done, by when and by whom) and the Actions (the actual doing of these “whats” and the accountability for them) are the last step – not the first. Indeed, while most people view this as a continuum it is more accurately viewed as a pyramid. The Values are the largest, most fundamental aspects of the support structure we use in helping our clients plan their lives. ACTIONS TACTICS ST TEGIES CONCEPTS VALUES Actions are always in flux, changing on a minute by minute basis as we constantly evaluate new information. Just as it would be foolish for a General to stubbornly adhere to a battle plan after new intel had been uncovered, or for the Captain of a sailing vessel to ignore a new trajectory after the wind had blown his ship off course, it would be naïve to treat our financial lives the same way we did a month or a year or even five years ago because “conventional wisdom” says we should. Our actions are relevant only within the context of our goals and our goals are nothing more than a means to that greatest end: leading a life of significance. 7
  8. 8. Values, on the other hand, are absolutes in our lives. The bring meaning to us each day if we allow them to permeate everything that we do and to even become the purpose of our doing. The fulfillment of our values is perpetual and never ending. We can never be left unfulfilled by their pursuit, as they are the purpose of our being. We are our values. Our actions are relevant only within the context of our goals and our goals are nothing more than a means to that greatest end: leading a life of significance. ON DISCIPLINE When we design and build an investment or financial strategy for a client, the discipline is always the same. We have the same tools and resources available to us no matter the client’s objectives. So how then do we decide which to use? If we simply let our clients dictate the goals without digging a little deeper into why they believe that goal to be important we miss a valuable opportunity to help the client see how something they had completely overlooked might matter to the bigger picture. Perhaps more importantly, we miss an opportunity to build a broader, deeper relationship that can help them see the role of wealth in their life and propel them forward in a way they might have otherwise overlooked. The United States Constitution is perhaps the most important document in the last 800 years. Though the constitution is famous for the bill of rights and subsequent amendments, the most powerful part of this pillar of democracy is what it doesn’t say. There are no specifics in the constitution about how laws should be enforced or how elections should be held or even what certain government officials should be doing on a daily basis. Why? Because the value of the constitution lies in the framework it established for making important decisions. As circumstances evolve and change in our lives we need a structure or framework for analyzing the situation, evaluating all the options and then pursuing the course most likely to yield results that will bring greater significance to our lives. The bigger the decision, the more importance the values framework and the bigger the role it plays. To settle for a basic analytical rather than a values-based approach to financial decision making is like confusing the map with the territory. Consider the greatest memories of your life. When you reflect on these experiences do you focus on the planning of each individual detail and the effort that went into creating the memory? Or, do you relish the experience itself and the personal growth and evolution it fostered? When your discipline becomes acutely focused on the fulfillment of your core values, your energy becomes more powerful. Like a garden hose whose flow has been restricted by your thumb, the intense energy created by such a large volume of energy being forced through such a narrow and deliberate space is extremely powerful. The tools and tactics we employ in our daily practice help create the intense focus and discipline to propel your plan and your life to the ultimate and highest level. But without the all-important force of your values behind it, the dynamic pressure disappears and the powerful stream is reduced to a trickle. The volume is the same, but the effect is not. 8
  9. 9. Higher Purpose - The Actualization of Wealth Imagine a rubber band which is very small in diameter but very, very thick. The farther this band is stretched, the more tension is created. The more tension, the more powerful the reaction when the energy is released. Tension always seeks resolution. Wealth energy operates in much the same way. The stronger the desire behind the energy and the more focused the purpose, the greater the effect. When your life and your wealth are organized around your values, a limitless amount of energy is created; energy that you master and which serves you and your most meaningful ideals. One of the greatest secrets of wealth-building: the purpose is the power. By allowing your financial strategies to harness this energy instead of trying to be the power behind it, you tap into one of the greatest secrets of wealth-building: the purpose is the power. In the new wealth paradigm, your strategies don’t motivate of energize your plan, they simply give direction to the application of your most revered principles. When your actions are tailored to ultimately align with the strategies and concepts of building wealth around your values, wealth becomes as vast (at least potentially) as the number of strategies and tactics that can be applied to the purpose of its growth. DEFINING VALUES What exactly is a value? It is very difficult to define a value without giving an example. As mentioned earlier, the most fundamental aspects of the energy that values create is desire and focus. The easiest way to come to a better understanding with yourself about what that means is to ask “if money were no object, what would my life be about?” When we ask this question of clients we obviously get a wide range of responses. If we ask a more specific question such as “what does money mean to you?”, we almost always hear a singular response: “freedom”. As universal a goal as freedom may be, it defies one universal definition. There are as many explanations of what freedom means as there are those who aspire to it. Freedom far too often means freedom from something when it is better intended to freedom to pursue something. “if money were no object, what would my life be about?” The question “if money were no object, what would my life be about?” serves the purpose much better, because it requires us to think in terms of pursuing our mission rather than fleeing a perceived oppressor (like work, etc.). In answering this question you arrive at the true meaning of what a value is: the intersection of Passion and Purpose. In the achievement of those things which evoke both your passion and purpose, your life takes on even greater meaning; you begin to live a life of significance. the true meaning of what a value is: the intersection of Passion and Purpose. 9
  10. 10. BRINGING IT TOGETHER “When your values are clear, your decisions are easy” – Walt Disney By understanding the importance of “the five parts of any successful mission” you begin to understand how to organize your financial strategies around the most important aspects of your life. You also begin to see the territory and not the map, maybe for the very first time. By using the 5 A’s as a blueprint for your financial mission, you ensure that your plan never cedes flexibility or the opportunity for evolution. You also become more keenly aware of how limitless the possibilities are when viewed within the context of “the mission”. It doesn’t even matter if your plan gets off track (almost all do), because you have a mechanism for translating your new circumstances into action and accountability. By adopting and ultimately implementing all of these principles in your financial and even your personal life, you begin taking the step toward lasting and meaningful change. Alternatively, you can continue to pursue financial success as an end unto itself, having only a sliver of a chance at ever achieving real abundance in life. Your purpose is clear, your mission well defined; your army is at the ready and awaits only your command. Release the energy of your most powerful purpose in life. Re-vision your wealth’s purpose. the results will be profound and they will be entirely yours. 10
  11. 11. FOUNTAINHEAD WEALTH T H E P U R S U I T O F W E A LT H AC T UA L I Z E D 800.661.5189 | 1860 Howe Avenue, Suite 106, Sacramento CA 95825 | Financial advisors offer advisory services through Securities America Advisors, Inc., an SEC Registered Investment Advisor. Registered representatives offer securities through Securities America, Inc., a registered Broker/Dealer, member FINRA/SIPC. Tax services provided by Fountainhead Wealth, Inc. Fountainhead Wealth, Inc. and Securities America are not affiliated.