There are many people who know more about the topic of leadership and could write a more insightful article on the topic than me. Therefore, I will not try to compete with what thought leaders in that space, such as John Spence or Simon Sinek, have already shared with the world. Where I can add value is on the topic of financial leadership. You will note this article is patterned after John Maxwell’s five levels of leadership to make the ascent to financial leadership more concrete and easy to apply to your life.
LEVEL 1: POSITION
Maxwell’s first level of leadership is “Position.” At this level of leadership people follow you because they have to, due to your position. For example, employees have to listen to their boss, and kids have to listen to their parents. That’s just the way it is. This is where financial leadership is tricky. There is rarely a situation where you have to save because of your position. Saving and financial planning is done because one wants to, or you realize for one of many reasons you should save for the future and plan for the future. Maybe that is why so many people in our country financially fail. They do not plan to fail, but instead they fail to plan. If you take away nothing else from this article, please take this: Planning for your future is a choice. You do not have to, but hopefully you realize your financial security creates a freedom unlike any other. Too many people focus on today and now, not worrying about tomorrow. The first step to becoming a financial leader is taking charge of your future! Create a plan and follow it all the way to success and financial independence. Online tools and financial professionals can assist if needed, but the key is to visualize what you want retirement to look like and then work backwards to understand what you should be doing today to make your ideal future a reality.
LEVEL 2: PERMISSION
The next level of Maxwell’s leadership ladder is “Permission.” People follow you because they want to, they have a relationship with you. You have taken the time and energy to show you care about them as a person and they want to follow you because they like you. Relating to financial planning, this is the tipping point. Once a person cares enough about their future and wants to commit time, energy and money to it, the leadership journey to financial independence begins. Instead of buying something extra, or taking that extra vacation, one decides to save that money for their retirement (the longest and best vacation of their life if planned properly). Being a leader requires making tough decisions, and making the decision to delay gratification for the hopes of a better and more comfortable tomorrow can be a very tough decision. Setting aside 15 percent of your income for retirement may seem boring or daunting, but it is a great start at becoming a leader in your life and your family’s financial future. Create a culture of spending less than what is earned. This very basic but very difficult task can pay large dividends down the road.
LEVEL 3: PRODUCTION
“Production” is the third level of leadership according to Maxwell. People follow you because of the results you have proven you can achieve. Simply put: Success follows success. You have made great strides in your company, career or financial life and now people are excited to follow you, the successful one. Financially speaking, as a business owner, think about the results your company’s retirement plan can provide. If one participates in a 401K, there are tax benefits and hopefully a company match. Tax deductions or tax-free growth and free money via a match make it better to save for your future. These benefits entice you to save, making it an easier decision to pass up the instant gratification and plan for a better tomorrow. A hard decision to sacrifice today for the future is only one a leader would make. These incentives or results make it easier and more exciting to save and prepare for your financial future, making you a financial leader. It also makes it easier for your employees to become financial leaders.
LEVEL 4: PEOPLE DEVELOPMENT & PERSONAL RESULTS
The next level of leadership is “People development and personal results.” At this level of leadership instead of developing yourself as a leader, you start developing others. Now that you have saved and seen your assets accumulate due to your financial leadership decisions, you can begin to share your wisdom with others and increase the quality of their financial life. The results speak for themselves: you have a positive net worth, a growing 401K balance, and reduced debt service. You start to talk about this with colleagues, family members, and others for whom you care for in order to make sure they are on the same path. Once you are on the road to financial independence, you want others to be there with you. Also, you want to do more for yourself. You have seen the power of your company retirement plan, so now you are saving the maximum, as well as saving outside of it to supplement your savings. You know your numbers and what needs to be done to make your goals happen and you are proud and confident so you communicate to others. You hope they will do the same, for their sake, not yours. This is at the mark of a great leader.
LEVEL 5: PINNACLE
The highest level of leadership according to Maxwell is level five, the “Pinnacle.” It is what you represent, who you are, that inspires others to follow you as a leader. Leadership at this level is completely selfless. Once you are a financial leader, making sure you and everyone you love is well taken care of, it is your responsibility to give back. Philanthropic planning is the top level of financial leadership. Yes, there are tax benefits, but you are inspired to invest in the betterment of the world around you. While global and national causes are phenomenal some of the most powerful change can be made in our own community. Locally, the Community Foundation, Tyler’s Hope, Sebastian Ferrero Foundation, Stop Children’s Cancer, PACE Center for Girls, SWAG, Junior Achievement, Rotary, Kiwanis, Haven Hospice, PALS, and the Boys & Girls Clubs are just a few of the many fantastic local charitable organizations that need funding from those who are true financial leaders. This is the greatest responsibly of those who achieve this level: to help and do more for your community, and maybe the world. This is leadership in the purest sense, helping those who cannot help themselves.
A RISING TIDE
They say a rising tide lifts all boats and that is certainly true in financial leadership. As you progress through the levels of leadership, you are setting an example for the people around you. From employees and colleagues to spouses, children and friends, your proactive financial decision making will have a ripple effect. Prudent financial decision-making on your part can position you as a financial leader, placing you in a position to improve the lives of the people and community around you.
WJ ROSSI is a Partner with Koss Olinger, a Gainesville-based wealth management firm that has been helping business owners succeed for nearly 50 years. WJ sits on Koss Olinger’s Investment Advisory Committee and is key in the firm’s investment management, estate planning and income distribution strategies. WJ can be reached at [email protected] or (352) 373-3337.