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A New Approach To Financial Planning

Financial planning, as a relatively new profession, has experienced a rapid pace of evolution. Initially, it began as an aggregation of previously segregated financial industry services—brokerage, banking, and insurance—but it took a major leap forward when the first class of Certified Financial Planner™ (CFP®) designation holders graduated in 1973.

The completion of this five-course curriculum marks a “textbook” approach to financial planning that has done the profession much good. But it has also done unintentional harm, because as is often the case in any established profession, the methods and mechanisms have a way of taking center stage, rather than those being served by them.

I’m sure you’ve experienced this in some aspect of your life, and even with the most reputable professionals—an accountant whose techniques trample over a more inquisitive approach to your tax return, an attorney who only seems to have one tool in his toolbox, or even a doctor who seems to see you only through her lens, rather than seeking to know and understand yours.

The Most Expensive Book I Ever Bought

I’ll never forget, after a period of dealing with chronic migraines for years, saving up enough money to go to an internationally-renowned specialist in Baltimore who didn’t accept insurance. In order to ensure I made the most of my visit, I read his best-selling book on migraine prevention cover-to-cover, dog-earing and highlighting every other page.

When I got to his office, I waited the compulsory 30 minutes beyond our scheduled appointment time, waited another 10 minutes after being seated in an exam room, and finally he entered, I on the edge of the paper-lined table. The first question he asked was, “So, did you read my book?”

He proceeded to outline its primary themes and recommend precisely the recommendations mentioned in the book, almost verbatim, all without really delving into when my headaches started or diagnosing why. I walked out a little shell shocked, especially after writing a check for half of my mortgage at the time for a single visit that illuminated nothing more than the book I bought on Amazon
for $9.99.

A New Approach To Financial Planning

Similarly, as financial planning has developed from theory to practice, the practice has often preempted the people it serves, resulting in a large number of financial plans across a diverse and eclectic range of clients that look surprisingly similar. It’s more convention than conversation, more template than tailored.

Yet there is a “new” approach (that actually finds its roots in the origins of the profession) that bucks convention and eschews templates. It has garnered several different labels, but it can be summarized as financial life planning. That word squeezed in between financial and planning is the key differentiator as it is also a reminder of the central theme of all the strategy and methodology—you, the client, and your life.

Financial life planning begins with an exploration of you—your present situation and circumstances as well as your hopes, dreams, fears, and concerns. Then it progresses to an articulation of your intentions and priorities in life that will then act as the guide through which all financial planning is done.

Choose Your Own Adventure

The end result is less a sculpture made in the image of your financial planner or even a paint-by-numbers illustration where you choose the colors. It’s a choose your own adventure book with an unlimited number of possible outcomes.

As I began to practice this type of financial planning, about 10 years into my now 23-year career, I was given a glimpse of something remarkable: financial planning that was as unique as those it served. But even more, I began to see plans shift well beyond the clients’ own expectations.

Because our lives are typically moving at such a harried pace, it’s very rare that we have conversation that is both life based and intention oriented. Sure, conversations about life will ensue over cocktails with friends, at family parties, or even during the commercials of the football games you’re watching this weekend. But most often, these conversations are largely superficial, and even when they do delve below the surface, rarely do these conversations have a trajectory that is designed to lead to genuine intention, much less action.

But through the practice of financial life planning, I’ve seen clients, many of whom had already checked most of the big financial planning boxes, change their financial plans quite dramatically once they did the work of more deliberately exploring life.

I’ve seen clients who expected to work for 10 more years retire—or change careers—almost immediately; clients who expected to stay planted in the same zip code for the rest of their lives chart a path for an adventurous move to a favorite destination (or move from their favorite destination to wherever their kids and grandkids lived to prioritize family); clients who dramatically changed their approach to charity or philanthropy; clients who expected to give their inheritance away at an unknown future death date plan a family meeting to discuss their hoped-for legacy while they are living; clients who wrote the book they’d been embarrassed to admit they’d always wanted to write; clients whose marriage was on the rocks due to financial disagreements saved by articulating for the first time their personal money stories.

Indeed, when the discussion begins with life before money, financial planning becomes vastly more interesting and meaningful, both for the client and the advisor. Yes, this process still involves everything in the textbook—investing, insurance, retirement, tax, and estate planning—but it takes on an entirely new form as a means, not an end.

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