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Many investors have lost money during the past year. Some have lost confidence in their financial security and are now concerned about their day-to-day living. People wish they had never bought that investment.

If they could turn back the clock and make decisions all over again, what would they do differently? Hindsight is 20/20. We all wish our financial decisions to have positive results, but the current reality is otherwise.

Investors are working in an economic atmosphere riddled with turmoil, doubt, and volatility—supercharged by fear and uncertainty. However, confidence can be regained once the client understands the difference between thinking that a financial decision will work for them and knowing which decisions are best.

My book Roots of Wealth: 21 Rules to KNOWING True Financial Security provides a means to achieve this confidence by looking beyond the numbers. The basis for the book is a unique process called The Strategic Legacy Solution, which is built on a series of rules and tools. Rules are to be followed, and tools are the methods or implementation processes for following the rules. To achieve confidence, a common sense approach, which is all too uncommon today, is used.

Let’s look at one of the rules and use an equity investment as an example. It’s not enough to study the financial aspects of an equity investment. To achieve authentic confidence, analysis of the equity investment must be deeper. Get to the root and focus on the needs of the client. Is that equity investment truly right for them?

The nature of the equity investment naturally makes investors focus on the potential return. One of my specific rules for clients is to look at the negative aspects of any equity investment and asks what can go wrong. Clients should be able to answer the following questions:

• Will I be able to sleep at night if my investment has a negative return?
• Will I be financially hurt if I lose 100% of my investment?
• Does a negative return create a tax or legal obstacle?
• If my return is negative, will I still be able to focus on opportunities in my life that are important to me?
• If my investment loses money, will I still be financially independent and strong?

Once the client has the opportunity to examine the negative aspects, accept their impact, and feel comfortable with the consequences, then the investment might be right for them. This goes beyond simple risk tolerance.

This seems like common sense, but is it observed in practice? One of the biggest issues encountered today is the cookie cutter approach of x + y = z, where ‘z’ usually represents a product. Often, the computer programs that fuel this approach are based on a “one size fits all” philosophy. They don’t take into account the result of a complete meltdown that can happen in an equity investment and how that would impact the client’s life.

The focus should be, and has to be, on the client. They need a measurable standard that can be used to assess any decision. If an investor can look at the worst possible negative result of an equity investment and say, “I will be fine and can move forward with confidence and strength,” than perhaps that equity investment is the right choice. Brian U’Ren is the president of Strategic Legacies Inc., one of the top wealth management firms in Canada, and the author of Roots of Wealth. He holds 14 trademarks and three copyrights for his work. His follow-up book, Roots of Wealth II – For Seniors, addresses how seniors can maximize income and safely transfer wealth to their loved ones.

Visit www.strategiclegacies.com or email brian@strategiclegacies.com for more information.