The eighth installment in the Star Wars series, “Rogue One,” arrived last week. Excitement is reaching a fever pitch, and our office isn’t immune. Our advisors are fans as well, so to celebrate, here are a few lessons from “Star Wars” to help cultivate your family’s financial health and confirm your advisor is a financial planning Jedi Master.

The Power of Holistic Planning

As young Skywalker’s advisor, Obi Wan Kenobi teaches him that the Force, an energy field created by all living things that binds the galaxy together, is the source of his power. For financial advisors to truly unlock their potential, they need to have a holistic view of their clients’ financial lives, as well as a mastery of investment strategy. By understanding how your various accounts, needs and goals all connect together, an advisor can be a truly powerful guide for your family.

Sticking to the Plan

While Luke is a neophyte just learning the ways of the Force, Han Solo is a hardened skeptic, disregarding advisors like Obi Wan Kenobi and instead preferring the lifestyle of a risk taker, which has led him to real problems with debt. When Luke gets distracted by Solo’s taunts, Kenobi reminds him to trust in his plan instead of making knee-jerk reactions. While things get rocky along the way, Luke eventually reaches his goal of becoming a Jedi Knight. It’s a good reminder for when the markets get rough: Trust in the plan, mitigate short-term emotional reactions, and focus on long-term goals. Han may call it luck, but financial planners know there’s no such thing.

The Quick and Easy Path Leads to the Dark Side

We learn more about the Force in the 1980s’ “Empire Strikes Back,” when Jedi master Yoda teaches Luke about the Dark Side. Like a good advisor, he tells Luke that chasing instant gratification, like investing heavily in a hot stock, can lead to ruin. When Luke ignores the advice, he’s almost defeated by Darth Vader. Yoda reminds us that patience is key with investing, not adventure or excitement.

Know Your Advisor’s True Value

Though his investment strategy might be questionable, Han Solo does understand value. Luke is shocked when Solo initially discloses his fees to pilot them across the galaxy in the Millennium Falcon. Luke says he could buy and pilot his own starship for less, but Obi Wan Kenobi knows expertise can command a fair price and even offers to spend more to ensure results. It turned out that Luke didn’t know flying through hyperspace from dusting crops, and Solo’s experience came in handy.

It’s Not Just About Money

Though Han Solo told Princess Leia that he doesn’t care about her or the rebellion, he becomes a true hero after he realizes that there’s more to life than money. Advisors are worth more than just allocating assets and providing returns; they can be even more valuable to clients by helping them navigate important milestones in life, like buying a home, sending kids to college, and retiring comfortably. Remember what Leia told Han: “If money is all that you love, then that’s what you’ll receive.”

Don’t Judge by Appearances

“Judge me by my size, do you?” Yoda may be small, but his power with the force is great. Similarly, many investors often think bigger is better and don’t realize that small boutique firms can provide superior guidance.

Source: WM

History provides a huge wealth of wisdom for helping us grow and protect our money.  Trader-turned-educator-turned-financial planner Tony Isola provides an awesome analysis of the application of history lessons:

How can investors act as applied historians and use this skill set to create wealth?

There are several minefields that could easily be avoided with some knowledge of the past:

• Most market corrections don’t turn into bear markets.
• Using leverage to boost investment returns often ends badly.
• The president has very little control over the global economy.
• Buying new financial products at market peaks is a poor idea.
• Bull markets last much longer than bear markets.
• Stocks are six times more likely to be up 20% than down the same amount.
• Uncertainty is always present and it is not a wise choice to use it as an excuse not to invest.
• Stocks will do the best job of protecting future purchasing power over long periods of time.
• Investing in the fastest growing world economies will not guarantee higher investment returns.
• Most recessions haven’t turned into depressions.
• Investment costs, savings rates and time in the market are the biggest components in generating healthy investment returns.
• Factor investing won’t work for most people because of their cognitive deficiencies.
• There is a large behavior gap between total mutual fund returns and what investors actually receive.
• The great majority of mutual fund managers will underperform low-cost index funds because of costs.
• Diversification works, just not every year.
• Stocks can stay massively over- and undervalued for very long periods of time.
• Real returns after inflation are the only returns that matter.
• Stocks are in a bull market 85% of the time.

All of the following can be proven with applied historical analysis. This is a much better strategy than relying on your gut, or believing a compelling story, when allocating money.

Source: Teachable Moment