Cookie-cutter financial advice has value, and there’s a time and a place for it. The problem starts when we mistake it for personalized financial advice.
By cookie-cutter, I’m talking about financial guidance that’s designed to work reasonably well for lots of people rather than being tailored to one person. You can call it financial education. By design, it’s informational and intended to answer a general question, not account for your entire financial life.
You can find general answers to your money questions practically everywhere, usually for free: articles, TikTok (including mine!), YouTube videos. You’ve likely seen ads promoting free retirement calculators and super-low-fee robo-advisors.
But cookie-cutter guidance isn’t limited to online tools. You can also get it from representatives at banks, insurance companies, and discount brokerage firms who rely on standardized models and approved recommendations rather than advice built around your unique circumstances. Some are salaried, others are paid through commissions built into the investments they recommend, but the common thread is the same: the guidance is designed to fit lots of people, not you. (If you’ve been following Count Up for awhile, you already know this is one reason I recommend fee-only, fiduciary advisors instead).
I sound a little judgy, so I want to be fair and acknowledge there are plenty of situations where that kind of guidance is just what you need.
If you’ve never budgeted before, “save three to six months of expenses” is a perfectly good place to start. If you need a gut check rather than a financial plan, “100 minus your age” gives someone with no other information a rough stock allocation to react to. If you’re looking for one number to anchor a conversation, saving 15% for retirement or following the 4% rule gives you something to work with. In other words, it’s a starting point. It can be really useful.
And maybe your financial life really does look exactly like the assumptions behind the rule, perfectly steady income, straightforward finances, no pension, no business to sell, no complicated tax issues, no family money challenges, so the generic answer might end up being pretty close to the right one.
When Generic Stops Being Good Enough
The trouble starts when your life stops looking average, or you decide you really do need financial advice because now it’s serious, and generic won’t help and, in fact, could really harm you.
Maybe you’re planning to sell a business. Or you’ve inherited money, are getting divorced, have a pension, startup stock options, aging parents, or a child who needs lifelong financial support. Then suddenly, the one-size-fits-all advice you’ve relied on has no idea who you are or what you’re trying to accomplish.
The same thing happens when market conditions change. Bill Bengen developed the 4% withdrawal rule after studying some of the worst retirement periods in history. It was never intended to be a one-and-done prescription. He adjusted withdrawal strategies as his clients’ lives and market conditions changed.
I see lots of people treat it as if it’s the answer, and then get thrown for a loop when the stock market drops or the price of gas goes up.
Researchers like David Blanchett have shown that changing interest-rate assumptions alone can dramatically change the odds that a 4% withdrawal strategy succeeds. Michael Kitces has pointed out the opposite problem: for many retirees, following it too rigidly can leave hundreds of thousands of dollars unspent that could have been used to enjoy retirement.
Same rule. Different people. But totally different outcomes because rules of thumb can’t make judgments. They’re supposed to be used broadly, not for specific advice.
Advice is different because life is different. Markets change. Tax laws change. Families change. Health changes. Good financial advice takes those moving pieces into account. A rule of thumb deliberately ignores your circumstances so it can apply to millions of people. That’s not a flaw—it’s exactly what makes a guideline or rule useful. But it’s also why rules sometimes need to be broken to arrive at advice that’s truly personalized.
It’s the same limitation with most robo-advisors. They ask a handful of questions, sort you into an investment model, and generate recommendations based on broad assumptions. That’s useful technology, but it isn’t the same as sitting down with someone who’s looking at your entire financial life and knows you (and your habits).
Real fiduciary financial advice has to start with you—your taxes, your retirement income, your family, your health, your values, and the tradeoffs you’re constantly facing. This is judgment, not just formulas. Sometimes there just isn’t one right answer. There may be two or three paths. Good advice helps you understand those tradeoffs so you can make the decisions that are best for you.
The Problem Isn’t the Rule. It’s the Context.
I’m a big fan of context. There’s no such thing as a good financial recommendation without understanding someone’s entire financial life. Vanguard attributes about half the value of good financial advice to something no online calculator, rule of thumb, or standardized recommendation can do: helping people avoid making potentially costly emotional decisions during difficult times.
So by all means, read the articles. Use the calculators and rules of thumb. I do. In fact, I create them myself in articles where I’m offering financial tips and best practices. Just don’t confuse useful financial information with personalized financial advice.
One is designed to give millions of people a good place to start. The other is designed to help you make the biggest financial decisions that happen throughout your life.
If you want to take the next step in getting personalized financial advice, check out my recent article on the three ways to work with a financial advisor.