Is Your Financial Plan Missing a Key Piece? Here’s How to Find Out

Many people assume financial independence is just about growing their investments, minimizing taxes, or having the right insurance coverage. But in reality, true financial security comes from structure, not just strategy.

One of the most valuable frameworks I’ve come across is The Quartet of Financial Independence, first introduced by Joshua Kennon in 2016. Kennon’s concept breaks financial stability into four essential areas: cash flow, liquidity, profitability, and net worth—but what really makes this approach powerful is how it can be applied in real life.

If you’ve ever spoken with a financial professional, you’ve likely been given one of the following approaches—each valuable in its own way, but often missing a critical piece of the bigger picture.

The Five Most Common Approaches to Wealth-Building

1. The Traditional Financial Planner – The Roadmap Approach

What They Focus On: Creating a comprehensive plan covering budgeting, investments, insurance, and estate planning.

What’s Great About It: Offers a structured approach for long-term financial success.

Potential Gaps: Some plans are too rigid, not leaving enough room for market changes or personal life shifts.

A Better Way: If you have a financial plan, check that it adapts to real-life changes rather than following a generic model.

2. The Accountant – The Tax-Smart Approach

What They Focus On: Helping you keep more of what you earn by optimizing deductions and tax strategies.

What’s Great About It: Minimizes unnecessary tax burdens.

Potential Gaps: A tax plan alone isn’t a wealth-building plan—it protects what you have but doesn’t grow it.

A Better Way: Tax efficiency is critical, but it should fit into a bigger financial picture that ensures investments, cash flow, and liquidity are also working together.

3. The Life Insurance Agent – The Protection Approach

What They Focus On: Ensuring your family and assets are protected through life insurance, annuities, and other risk-mitigation tools.

What’s Great About It: Helps secure your financial future against unexpected events.

Potential Gaps: Many people end up overpaying for insurance while missing out on other ways to grow wealth.

A Better Way: Insurance is one piece of the puzzle, but make sure you’re balancing protection with profitability.

4. The DIY Investor – The Hands-On Approach

What They Focus On: Managing their own investments, often through stock trading, index funds, or real estate.

What’s Great About It: Full control over investments and lower fees.

Potential Gaps: Emotions can lead to costly mistakes, like selling too soon during a market dip.

A Better Way: If you’re investing on your own, make sure you have a structured framework that prevents emotional decision-making and ensures long-term stability.

5. The Separately Managed Account (SMA) Advisor – The Portfolio-Centric Approach

What They Focus On: Building custom investment portfolios for high-net-worth individuals.

What’s Great About It: Highly personalized investment strategies.

Potential Gaps: Investments alone don’t create financial security—without the right cash flow and liquidity plan, even a great portfolio can leave you vulnerable.

A Better Way: Make sure investment management is paired with a financial structure that includes cash flow planning, risk management, and net worth tracking.

A More Complete Approach: The Quartet of Financial Independence

Kennon’s Quartet of Financial Independence, first published in 2016, was built on a simple but powerful idea: wealth is not just about what you own, but how well it’s structured. Instead of focusing on just one strategy in isolation, financial independence comes from integrating all key areas into a repeatable, adaptable system.

1. Cash Flow – Ensuring More Money Comes In Than Goes Out

2. Liquidity – Keeping 3-6 Months of Reserves for Security

3. Profitability – Investing for Long-Term Growth Without Emotional Trading

4. Net Worth – Tracking Assets vs. Liabilities for Sustainable Wealth

When all four work together, you’re financially prepared for anything—whether the market is up, down, or unpredictable.

How This Works in Real Life

Case Study 1: Avoiding a Forced Sale in a Market Crash

The Situation: Alex, a tech professional, had a $2M portfolio but low cash reserves.

The Problem: When the market dipped, he had to sell investments at a loss just to cover expenses.

The Solution: If Alex had cash flow and liquidity in place, he could have kept his investments intact and recovered when the market rebounded.

Lesson: A great investment portfolio isn’t enough—you need liquidity to avoid selling at the worst possible time.

Case Study 2: Maximizing Growth in a Bull Market

The Situation: Emma, a high-income professional, was sitting on too much cash because she feared market volatility.

The Problem: While her cash was “safe,” she was missing out on higher investment returns.

The Solution: By structuring her financial plan around The Quartet, she could confidently deploy cash into investments while keeping a security buffer in place.

Lesson: Too much cash can be just as risky as too little—you need the right balance between safety and growth.

Final Thought: Are You Covering All Four Areas of Your Wealth?

Many people believe financial independence is just about having enough investments, minimizing taxes, or securing insurance. But true independence comes from having a financial structure that works in any environment.

Use this quick checklist to assess your financial strength:

• Is my cash flow positive every month?

• Do I have 3-6 months of cash reserves?

• Are my investments growing long-term?

• Is my net worth increasing each year?

If you can’t confidently say “yes” to all four, it’s time to adjust your strategy.

Remember: Financial independence isn’t about predicting the future—it’s about being prepared for anything.