A new approach to financial planning

Financial planning, as a Relatively new profession, has experienced a rapid pace of development. Initially, it began as an aggregation of previously separated financial industry services – brokerage, banking, and insurance – but took a major leap forward with the first class of Certified Financial Planner™ (CFP®) They graduated in 1973.

Completion of this five-course curriculum represents a “book” approach to financial planning that has greatly benefited the profession. But it also caused unintended harm, because as is so often the case in any established profession, methods and mechanisms have a way of taking center stage, rather than those that serve them.

I’m sure you’ve experienced this in some aspects of your life, and even with the most reputable professional – an accountant whose techniques trample a more inquisitive approach to your tax return, a lawyer who seems to have only one tool in his business. A toolbox, or even a doctor who seems to see you only through her lens, rather than striving to know and understand your lens.

The most expensive book I ever bought

I’ll never forget, after a period of dealing with chronic migraines for years, saving enough money to go to a world-renowned specialist in Baltimore who didn’t accept insurance. In order to ensure I get the most out of my visit, I read his bestselling book on migraine prevention from cover to cover, illuminating every other page.

When I got to his office, I waited the obligatory 30 minutes past my due date, and I waited another 10 minutes after sitting in the exam room, and at last he came in, me at the edge of the paper-lined table. The first question he asked was, “So, did you read my book?”

He proceeded to outline his primary themes and meticulously recommend the recommendations in the book, almost verbatim, all without delving into when the headache started or diagnosing the cause. I came out a bit in shock, especially after writing a check for half the mortgage at the time on one visit that didn’t light up more than the book I bought on Amazon
for $9.99.

A new approach to financial planning

Likewise, as financial planning has evolved from theory to practice, practice often anticipates the people it serves, resulting in a large number of financial plans across a diverse and eclectic group of clients that look surprisingly similar. It’s more of a convention than a conversation, more of a template than a designer.

However, there is a “new” approach (which finds its roots already in the origins of the profession) that eschews tradition and eschews stereotypes. It has received many different classifications, but it can be summed up as financial life planning. This word sandwiched between finance and planning is the key factor that differentiates it because it is also a reminder of the central theme of all strategy and methodology – you, the client, and your life.

Financial planning for life begins with your exploration – your current situation and circumstances as well as your hopes, dreams, fears, and interests. He then proceeds to clarify your intentions and priorities in life which will then serve as a guide by which all financial planning will be carried out.

Choose your own adventure

The end result is not carved on a picture of your financial planner or even an illustration by numbers where you choose colors. It is a book choose your adventure with an unlimited number of possible outcomes.

When I started practicing this type of financial planning, about 10 years into my now 23-year career, I got a glimpse of something remarkable: financial planning that was as unique as those I served. But more than that, I’m starting to see plans go well beyond customers’ own expectations.

Since our lives usually move at an accelerated pace, it is very rare that we have a life-based conversation. And the intention oriented. Surely, conversations about life will start over cocktails with friends, at family parties or even during the commercials for the football matches you are watching this weekend. But more often than not, these conversations are pretty superficial, and even when you delve deeper into the surface, these conversations rarely have a path designed to lead to real intent, let alone action.

But in my life financial planning practice, I’ve seen clients, many of whom have already checked out most of the big financial planning funds, dramatically change their financial plans once they do the work of life exploration more deliberately.

I’ve seen clients who have expected to work for another 10 years retire – or change jobs – almost immediately; Customers who expected to stay in the same zip code for the rest of their lives chart a path for an adventurous transition to a preferred destination (or commuting from their preferred destination to wherever their children and grandchildren live to prioritize family); Clients who have significantly changed their approach to charity or philanthropy; Clients who expected to give up their inheritance at an unknown date of death in the future plan a family meeting to discuss their hoped-for inheritance while there living; Clients who wrote the book were embarrassed to admit that they had always wanted to write it; Clients whose marriage was on the rocks due to financial disagreements saved by first voicing their personal financial stories.

Indeed, when the discussion begins with life Before Money, financial planning becomes more interesting and meaningful, for both the client and the advisor. Yes, this process still includes everything in the textbook — investing, insurance, retirement, taxes, and estate planning — but it is taking on a whole new form as a means rather than an end.

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