Why Do Financial Plans Fail? | 185

MORI 185 | Financial Plans Fail

Warning – For all of you that love planning, this may not comfort you. But you’ll quickly learn where there’s hope!

Why do financial plans fail every time? How can you have a prosperous life NOW AND IN THE FUTURE?

Join our host, Cash Flow Expert, and “Anti-Financial Advisor” – Chris Miles – to learn why ALL financial plans fail, but still create certainty and hope to have a better future than the average person who does plan.

Tune in now!

Chris Miles Bio:

Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host that has been featured in US News, CNN Money, Bankrate, Entrepreneur on Fire, and has spoken to thousands getting them fast financial results

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Why Do Financial Plans Fail?

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In this episode, I want to bring up an awesome point. Something that I’m reminded of very often when I work with my clients. I refer to myself as the anti-financial advisor because that’s what I am. I’m telling you to do almost the exact opposite. One of the big things that financial advisors do, and I know because I was that person, is they try to create a financial plan for you. They try to project numbers out.

They will say, “If you put in $50 a month for the next 40 years at 12% interest, you will be a millionaire,” which is bull crap because, 1) It doesn’t work that way. 2) They haven’t figured out inflation or taxes. 3) What they also haven’t figured out is that 12% is unrealistic in the market. They will always say, “I can’t guarantee it but that’s what the market has done since two million years ago.”

Financial planning is messed up. If you think that somehow people are going to be able to project your future in a calculator, you have been misled big time. It’s not your fault. You have been told by people your whole lives, especially financial people of all sorts. Even your parents have been taught by financial person and banks. They are saying, “You need to start saving. You got to save everything you can and save regularly. In fact, forget about the money.

Use that for savings. Have a 401(k) and stash it away forever. You are getting an awesome match. You are getting a 100% rate of return,” which, if you’ve read my previous episodes about that, it’s a bunch of crap. It’s not true. It’s not possible to do that. You would be richer than Warren Buffett in twenty years. That’s not going to happen.

Here’s the thing. Financial planning is messed up. It doesn’t work. I learned this as a financial planner. I like to be realistic. I do not like to over-promise. I even got into a pretty emotional conversation with somebody because I was like, “I’m not going to do something for a client that I don’t think is a good fit. I don’t care if it pays me or not. I don’t want to do something like that.”

When I was a financial planner, I did that for four years back in the early 2000s up until about the end of 2005 into 2006. When I did that, it was fascinating because I would run numbers for people. I would say, “Let’s run it at 10%, 12% or 8%.” If I went down to 8% or 10%, the numbers didn’t look as good. I thought, “I don’t want to do that. I can’t promise 12% but at least the small-cap stocks have shown an average of 12% over the last 40 billion years. I will use that number.”

When you hear average rate returns, for those that haven’t heard me talk about this before, averages are not actual returns. For example, if you lose 50% in a year in a stock or a mutual fund, a 50% gain will not get you back to zero. If you go $100,000 and lose 50%, you’ve gone down to $50,000. If you got a positive 50%, which you would think, “That’s negating the negative 50%, so we are going back to zero,” a 50% gain on $50,000 is not another $50,000. It is only $25,000. If you lost 50% and then gained 50%, you’ve still lost 25% overall. You went from $100,000 down to $50,000 then back up to $75,000. They love the average returns because what looks better?

Financial planning doesn't work. Once you create a financial plan, it's going to go wrong. And the longer the term you create the plan, the worst it’s going to be. Click To Tweet

For an actual return in that scenario, if you went down from negative 50% up to positive 50%, the average return is zero. You should be breaking even but you lost money even though you got zero. How is that possible? That’s the difference between average and actual. Whenever you have a negative number, average numbers and actual numbers don’t agree anymore.

If you want to get back to $100,000, you have to get a 100% rate of return. Let’s do that math. You lost 50%. You went down to $50,000. You doubled it and got a 100% return. You are back up to $100,000. Negative 50% plus 100%, that’s 50%. You divide it by two, and it is 25% per year. How is it you got a 25% average return and got nothing? You got back to where you began at $100,000.

I forgot to mention that you had some fees coming out, so you’ve lost about $3,000. You are down about $97,000 because you paid about 1.5% in fees per year. Congratulations. You’ve lost $3,000 but you made a 25% return. This is one of the biggest problems. When I tried to use average returns, it didn’t guarantee they get that. I learned that as a financial planner.

When I was the traditional financial planner, somebody came and taught us that. It blew our minds because we were thinking, “If you lose 50% and gain 50%, you are back to zero. You are back to where you started.” You are still below. You still lost money. That blew my mind. I realized, “The numbers I have been showing people, maybe they are wrong.” Not to mention, you start factoring in inflation.

I remember when I would put calculations of inflation in the calculator. Every time I put in 3% or 4%, or what’s more of the reality, 5% or 6%, it depressed me, and I knew it depressed my potential clients. I was like, “I will show a 2% inflation.” The government only shows about 3%, give or take, because they don’t want to pay more in Social Security than they have to. They’ve tweaked the numbers and adjusted what they measure as inflation and what’s not measured. The things that are the most inflationary in our lives, they try to take out so that they can make the numbers work. Also, not to mention how they calculate everything. All of these things have been manipulated.

Numbers have been manipulated to help you see things. Can you imagine why after decades of financial advisors that have been on the scene, people are like, “I don’t have as much as I thought I would?” It had been overpromised and underdelivered. It’s a bunch of bull crap. If you want real numbers, go ahead and take those numbers they have been telling you. Instead, put a 6% rate of return at best and then see how the numbers look. You will realize it’s depressing. You are like, “I got 1/5 of the money they promised me.” That’s right.

I want to talk about financial planning and why that doesn’t work. Obviously, the numbers don’t work. That’s a big one but there’s more to it than just that. Even from my perspective, if I had the right numbers, there are some things that are still at play that mess things up for you. For example, most of the time, things are speculative. In the traditional financial world, they are telling you to invest in mutual funds that you have no clue how much you are going to make.

I can guarantee that financial advisors were a little bit dumbfounded by how much they made over the last couple of years. They think they are the rockstars or the people that did the investment think they’re rockstars. In truth, you guys suck. You didn’t do anything. If you are giving yourself a pat on the back for great returns in the market because your funds performed well, you need to wake up.

You had nothing to do with that. When I have people who are like, “I’ve done awesome this year, I’ve done 15% or 20%,” I say, “Everybody else did, too. What makes you so special? You didn’t do it. It was the market.” That means it’s even worse for you. That means when it goes down to adjust to get back to normal, you are going to be like, “I lost a lot.”

MORI 185 | Financial Plans Fail
Financial Plans Fail: The government only shows about 3% give or take because they don’t want to pay more in social security than they have to. So they’ve tweaked the numbers and adjusted what they measure is inflation.


People have short-term memories. They don’t remember what happened to all of their money years ago. If you don’t remember that or weren’t investing back then, you need to wake up. Get out of speculative crap. If you are in mutual funds, 401(k)s, IRAs, and all that stuff, you get to get out. This is not the time to be in. I know I have been saying that year after year but that’s the truth. If you are a horrible spender and can’t control yourself, then that’s great. Maybe that’s a great way to keep the money away from you. The thing is, when you need the money the most, you can’t touch it very well. They make it hard for you to even get your money.

Here’s the thing. We are trying to do returns. It’s all speculative. It’s all guesswork. If you are trying to guess, “My average is going to be 10% or 12% plus per year from this point forward in mutual funds,” you got another thing coming. A correction is overdue, and I don’t even know if that correction will even happen for another year or two, to be honest.

2018 could be a good year, and I could be wrong. Something could come up in 2018 in the middle of it but from what I’ve seen, the economy looks pretty strong. Figures don’t lie but liars figure. There could be all kinds of numbers being adjusted that we don’t know about that could be putting smoke in mirrors. You got to be careful of that.

Speculative numbers can throw things off. There are no guarantees. If I’m going to do something, I want something that’s going to give me a guarantee. First, a guarantee that all of my money is going to come back, and then the second priority is to make sure I get a return of them on my money, too. I want a return of my money 1st, and then a return on my money 2nd. I want to make sure that I’m getting great returns. You can get way better returns in the stock market anyways. There are so many better options. I haven’t advertised one that does better than the stock market overall, especially in the last several years. There you go but that’s not guaranteed either.

I will be the first to admit that even those guys will tell you there’s no guarantee on that. You could lose money. When you have no control over a situation, and you invest in things that you have zero control of, and your risk is high, my ability to project out what your future will look like is flawed. That’s true. This comes to the second point. The first one is there are speculative numbers. The second thing is that we can’t see the future. I don’t know how long you will be alive. We hope you will be alive for a long time, but you can be gone tomorrow. I could be gone tomorrow. We don’t know that. We can’t see the future. It’s all guesswork.

The longer the term that you’re trying to project out, the more inaccurate it is going to be. Let’s admit it. When you go to a financial advisor and they say, “Here’s what it looks like after 30, 40 or 20 years of projections,” the thing is, once you walk out of their office doors, their projections are wrong because something changes in the market. Especially when you do speculative stuff, things change. Your cashflow can change. Your life situation will change in some way, for better or worse. We don’t know. We can’t predict the future. That’s one issue.

We don’t even know what’s going to happen. We don’t know how long you would be alive. All of these people that are trying to invest for the long haul might be dead before that long haul even comes up. What good did it do you if you didn’t have any enjoyment because you are trying to sacrifice for the future? I’m all about having a great future but also about having a great present. We will talk about that in a little bit, too.

The third thing is there are too many variables. I mentioned inflation. That was hard for me to figure out because I had to adjust the numbers to make them look better. We can only know what returns you are going to get. It’s possible your returns can be better. Here’s another thing. We don’t even know what your cashflow is going to be like, whether it’s going to be restricted or they could be layoffs in your future. We don’t know.

Here’s the thing. There are so many variables. There is also the fact that you might have your own personal inflation rate. My dad had medical costs that came upon him suddenly. He’s had medical issues but all of a sudden, he started coming more out of pocket, where it took away a quarter of his income to pay for some of his medications. This is with coverage. Think about that.

You need to question everything and pretty much do the exact opposite to get good results. Click To Tweet

His inflation rate has skyrocketed. His inflation rate went up 30% plus in a year, not the 2% or 3%. His personal inflation rate went up. Yours could go up. You can have more kids or fewer kids. Kids can move back home. You could have situations come up. It could be layoffs. It could be a job raise. It could be the opposite that could be true. You have a better future than you expected. This is true in my situation.

I guarantee you. If I met with a financial planner a couple of years ago and said, “You are doing pretty good but here’s your trajectory. Here’s your path,” if I would have told them, “Compared to two years ago, I’m making about ten times the income,” They would probably be like, “That adjusted the numbers, doesn’t it?” It does. If you are in business, these numbers can change, and they can change fast.

I have a client I got off the phone with. We are doing a simple plan for them and getting the foundational piece set up. For them, they only wanted an extra $300 a month, so we did it. That’s between money freed up and money that they can earn the $300 a month, not including what the wife could be doing in her business. In her business, I said, “Let’s focus on getting two new clients a month.” That could be paying them an extra $5,000-plus a month depending on transactions and so forth.

That’s why I put focus on her business. We spent one meeting talking about her business and how even to get her mentally prepared to have a better business because she was newer in business. We talked about that, and not to mention, we had some tax breaks, too. We were like, “Let’s find ways to do that.” What we did is we freed up over $300 a month. Now, we’ve got potential for several thousand a month that we can do.

I had another person that has been paycheck to paycheck for years. They finally said, “Enough is enough.” We found an extra $2,000 a month. That extra $2,000 a month can be put to much better use than what they were doing with it. Freeing that $2,000 a month up can be life-changing. The problem is that there are a lot of variables in life. Here’s the thing. Financial planning doesn’t work. Once you create a financial plan, it’s going to go wrong. The longer the term you create the plan, the worst it is going to be.

Even when I create plans, I create plans for more short-term like the next year or two max. We might have some investments we might project out 5 or 10 years but we don’t go beyond that. Variables start popping up left and right. People will say, “Can you give me a nice ten-year plan?” “Sure, but I can guarantee it’s probably going to be crap. It’s going to look good. It could be better or it could be worse. We don’t know.” I tell people, “Let’s focus on the short-term.” That’s one thing that I do. One, we got to create a good foundation. We got to make sure we have your money captured. We stop the leaking. We stopped the bleeding. That’s the first thing.

The second thing is how do we make sure you have a great foundation so that no matter what happens in life, no one event can take away all your money? This is why protection is so important. This is why you got to have a good attorney. You make sure you have tax protection. You got to make sure you have insurance protection and things like that to make sure that we keep this plan in place that if anything pops up, it doesn’t derail you. We can try to minimize that risk as much as possible. If you create a good foundation and minimize loss, it’s amazing what happens.

I have one of my clients call me up after a year. He was like, “What the heck?” He was pretty skeptical. He was like, “I only make about $120,000 a year but my net worth went up $100,000. Why?” I was like, “It’s easy. You didn’t lose any money. You kept all the money you had, and we made some money on top of it. That’s why.” It blew his mind. It was the best he had ever seen happen, even after working for decades with financial planners.

You have to create a good solid foundation. You got to make sure you are applying the correct principles. We got to make sure you don’t believe all that crap like high-risk rates, and high return. You got to be in it for the long haul. Believe that average returns and things like that and some things you mentioned, all those things, even about how you believe debt and how you are supposed to save money. You got to question everything and pretty much do the exact opposite to get good results. Otherwise, you will be stuck broke like every other American or any other person out there. You got to almost do the opposite to do that.

MORI 185 | Financial Plans Fail
Financial Plans Fail: Numbers have been manipulated to help you see things.


The focus especially has got to be cashflow now. Here’s the thing. I can’t tell you what’s going to happen in your life, even a couple of years down the road. That could be a very different life but I can tell you what we can do with cashflow now. It’s not about accumulation. It’s about acceleration. Your money is meant to flow and grow. It’s not meant to accumulate and stagnate. We got to focus on how we can create the most cashflow.

If you got more cashflow like $2,000 a month, we’ve got options because cashflow creates options. That’s where freedom comes from. That $2,000 could be used in all kinds of ways and can create all things. That will change your plan. You will have more now and in the future if you focus on cashflow and not locking your money away for five billion years. I’m okay if sometimes you want to lock certain amounts of money away but the big priority should be on, “How do I create cashflow?”

In my life, how I have been able to retire twice is because I’ve shifted that perspective to be about cashflow, not accumulation. That is the key. If you can go and create a solid foundation, follow the correct principles and strategies that go with it and focus on cashflow. This is where it’s the exact opposite. This is where you start doing anti-financial advising. This is the trick.

If you feel like you need help with this, reach out to me and say, “I might be one of those people. I make great money but don’t know where it’s all going or should have more. I should be able to put this savings to better use to create cashflow for me.” If that’s where you are, you are probably the perfect person for me to talk to and help create awesome results.

It’s where you create cashflow and real results now, not projecting out 30 or 40 years of what might happen if you are even alive. It’s all about now. Financial plans don’t work, creating an awesome present or an awesome life now that creates a better future later does work. You make a great and prosperous week. We will talk to you soon.


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