The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth

When building a financial plan or an investment strategy, most people start in the wrong place.

They waste time chasing tactics; they try X or Y or Z for a short period, think it "doesn't work," then move on to the next … never realizing that switching from activity to activity is a core reason the success they want never materializes.

It’s not that seeking optimal investments or action steps is a bad thing. But there is not a single correct way to reach financial success.

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The right plan for you will be different from the correct strategy for someone else — and no matter how good any financial plan you create on paper looks, it will only ever be as good as the work you put into it.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Why some financial plans fail

After being a financial adviser for 18 years, I know that some people fail to get the results they want from their financial plans for three key reasons:

• Lack of consistency and sporadic implementation of action items from the plan
• Doing too much and producing low-quality results (instead of narrowing the focus on doing a few things extremely well)
• Commitment to the process comes and goes over time

These patterns lead to some predictable outcomes. As people either ignore basic action steps that would lead to steady progress or leave important core actions undone because they choose to put energy into areas that don’t actually move the needle on their plan, things slip through the cracks.

Mistakes are made but not corrected, which compounds the errors over time.

People sometimes get distracted and neglect their finances for long periods, leaving a big mess and a lot of catching up to do when they finally sit down to work on things.

That mess often is so overwhelming that the cycle starts all over again right then and there; they are back to ignoring their finances altogether, or they opt to chase a shiny object instead because it seems easier — even though it is unlikely to solve the core issues left unresolved by the underlying behavior of avoidance, inconsistency and lack of focus.

Which strategy you choose is important

Read a book like How I Invest My Money, edited by Joshua Brown and Brian Portnoy, and you’ll see that time and time again, investment professionals will say that the particular strategy or tactic they use with their own finances may not be the objectively “best” or “correct,” but that it works for them.

There are so many different tactics in the world of financial planning and investment management because there are so many different objectives people have. There are so many different goals to achieve, and so many different ladders to climb.

“It works” means that the plan or strategy is designed in such a way that, first and foremost, it will meet the specific objectives of the person or household using it.

It also “works” because it is the plan that is most likely to allow whoever is using it to do the three most important things that determine whether you succeed or fail.

Three features that determine the success of a financial plan

When financial plans fail, it is not necessarily because someone took the wrong action, or used a subpar strategy. And I would argue it is almost never because they missed out on some secret, exclusive information either.

It is because the plan, or the person trying to follow it, did not focus on these three critical elements:

• Consistency
• Commitment
• Confidence

You can increase your probability of success, no matter what your particular financial plan looks like, if it features these core components. Here’s what each looks like in practice.

1. You take consistent action

Being consistent means you show up and take the necessary actions, like saving sufficiently, investing wisely and protecting yourself and your assets along the way.

It’s one thing to make a good financial decision once, or to take a single action that creates a positive impact on your financial life. It is quite another to do it day after day, month after month, for all the years necessary to grow your balance sheet and create real wealth.

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You create consistency when you keep your money invested so it can benefit from compounding returns (rather than trying to time the market or jumping in and out of cash, thinking you can avoid bad market days this way).

You create consistency when you avoid mistakes you didn’t have to make (like taking on too much or unnecessary risk, for example).

Consistency is critical. Consistently executing on your strategy will generate more progress toward your financial goals than starting and restarting on various plans, strategies, approaches or investments.

One percent better, or 1% closer to where you want to be, creates incredible results when applied over time.

Which leads to the second element that must be present for success: commitment.

2. You commit for the long term

We know that financial markets are incredible vehicles for wealth creation … and that happens most reliably when investors are patient and willing to invest through full market cycles, over and over again. In other words, it takes time. As in, decades of time.

But that commitment to the long term will turn the most modest of portfolios into financial powerhouses if the invested funds are allowed to compound for 20, 30 or 40 years.

3. You feel confident about your choices

Finally, you must feel confident in the plan you’ve chosen and the decisions you make.

Without confidence that your strategy makes sense for you, it becomes virtually impossible to stay consistent and committed to the process over the decades it will take to see the optimal results of any financial or investment approach.

There are countless paths available to get to where you want to go. The one you choose should align with your goals, your actual ability to follow the plan, the resources you have to execute on it, the realities of whatever limitations you face — and what makes you feel confident you are on the right track to achieve what you want.

If you want to find true financial success, don’t waste your energy trying to find the perfect plan. The one ultimate “best” tactic or strategy doesn’t actually exist.

Everything depends on the context of your life, and the optimal strategy for you is one that you can commit to and execute consistently over time.

What matters is that you know yourself and what you're willing to do. Know the tradeoffs you won’t make. Play to your strengths, have a plan for your weaknesses and avoid what you can't sustain.

Almost anything can work if you're willing to work, too.

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