(3 minutes to read)

“You can’t connect the dots looking forward; you can only connect them looking backwards.”  Steve Jobs

This month’s article is a little more personal than most, which makes me a little uncomfortable—but I’m writing it anyway because it may be helpful to some people.

People come to me with all sorts of financial issues. Some people want help reducing taxes. Some are looking for better investment returns. Many don’t understand their RSUs or stock options. Others simply want to know where they stand financially or when they can quit working. These are some of the more common concerns that drive people to seek professional financial advice beyond just suggestions from family and friends.

An individual’s financial life is an incredibly complex system with multiple fluctuating variables. All the pieces are interrelated. A family’s finances can be even more complex, as each member’s finances impact the whole. One change can cause a cascade of changes throughout the system. Sometimes the ramifications of a change are not obvious without analysis, and the consequences often play out over decades. This long timescale matters with money, because money grows exponentially.

I have always approached personal finance as a complex dynamic system—maybe it’s my engineering background. In my first job, I was a system design engineer, developing inertial navigation systems for military aircraft, and it was extremely important that the pilots who relied on these systems not get lost. The navigation systems used a variety of internal and external sensors to maintain a constant mathematical solution to navigation equations, providing pilots with their current position and altitude, while warning them of any deviation from the mission route.

It recently struck me, like Newton’s apple, that this is exactly what I still do.

I provide a continuous assessment (navigation solution) of client progress toward financial goals (mission route) and help them stay on track through life changes, market movements, and evolving tax rules (changing missions, weather, threats). Their fluctuating personal data and our strategies—career plans, investment returns, retirement account usage, savings rates, RSU grants, college cost, interest rates, multiyear tax planning, expenses, home purchase, etc.—feed into the financial navigation solution. Any single input provides some information, but on its own it’s not determinative of an individual’s overall financial situation or health. The big-picture, 360-degree view that evaluates all important information and accounts for interactions between areas is required to stay on course.

My years in product management also likely play a role in the systems-thinking approach to personal finance we use. In both startups and large companies, product managers work across functional areas like engineering, marketing, sales, operations, human resources, and finance. This kind of interdisciplinary and holistic view has inspired our firm’s approach to personal finance. All the areas of personal finance are interconnected, each with their own context and perspective. And just as in a product team, the interactions between areas often are not straightforward. Success requires all areas working together in harmony.

Looking back, I can now connect the dots on how we’ve arrived at our process and approach. I don’t know if it’s nature or nurture—whether, as a geneticist might say, my work environment has influenced my genes to express themselves this way. But I’ve always operated with systems-thinking and whole-problem solution methodology across three distinct careers and roles, and so this approach comes naturally to me. It provided exceptional results when I first designed the process to guide our clients years ago, and it continues to do so now.

Improving one aspect of your financial life, as many seeking financial advice originally intend, is good. But understanding your finances holistically—taking a comprehensive view to see how all the pieces fit together and complement one another—leads to better results. Especially when coupled with strong systems thinking.

I take satisfaction in how at Parkworth Wealth Management we’ve brought it all together into our financial advising. All the parts work together. All the dots are connected.

Parkworth Wealth Management provides holistic wealth management services including financial planning, RSU and stock option planning, investment management, tax planning, and others, on a fee-only basis and as a fiduciary, acting in clients’ best interests. If you want help connecting the dots in your financial situation, schedule a complimentary consultation.