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The Quality of the Unquantifiable.


This post is unapologetically plagiarized from Scott Cole. Scott is a CFP® friend of mine who runs Cole Financial Planning in Bessemer, AL. I've thought about writing on a similar subject before, but I can't write it better than Scott did so I asked his permission to re-blog his great post. Enjoy!

There are many things in life that are just difficult to quantify. This is a convoluted truth to reckon with for those of us who work in a profession accustomed to speaking in terms of rates of returns, expense control and savings rates, but is it possible that the most valuable part of an advisory relationship is found in those things that are not quantifiable?

Let’s see if we can get a handle on this concept. I have two young daughters and therefore we have an immunization schedule we must follow. It requires all the parental effort necessary to get them ready, take them to a doctor’s office, get their progress checked and, of course, get shots. This is not inexpensive.

Most every parent does this, but it is not a source of consternation. We take on the added expense in part because we know the costs of not doing these things would be far more considerable. What is the value of them not getting a disease? How do you quantify something that doesn't happen? How do I price peace of mind that my child is healthy? It is unquantifiable.

When you have a relationship with a financial advisor, there are certainly costs involved and there are some quantifiable results, but that is not the whole story. What about mistakes avoided, mistakes that could result in higher costs or in the worst cases financial catastrophe.

How about peace of mind? Truly that is difficult to value, but when you know you have an expert working on your behalf, you can be free to enjoy other things, you can feel more confident knowing you are not on your own. As someone said to me recently, it is hard to quantify the value of being able to sleep at night.

What is interesting to me is that people are paying a great deal of money through a variety of financial products but getting none of these non-quantifiable benefits. Prospects come to us all the time overpaying through expenses, commissions and poor product placement and they aren’t getting any advice, they simply get sold.

I am as subject as anyone to being too cheap at times, but there are some things too valuable to cut corners on and often times those things can’t be quantified into dollars. Peace itself is priceless.