I am just returning from the latest conference I have attended and am again enthused about the profession I have chosen and the people I get to impact because of it.
If you were looking for a definition of a financial planner in the recent past you might have found a financial advisor/planner helps you create and execute a financial plan. Your advisor determines how much money you have now, how much money you’ll need for the future, and how you’ll grow it. Money, Money, Grow it.
That is not, however, what REAL financial planning is. Real financial planning may be best summed up as “Advisors/planners helping people live better lives.” This goes hand in hand with the idea that “advisors/planners help you be the best you.” No “money” in those statements.
The first thing a typical financial planner usually does is listen (hear you) and learn about you. They are trying hard to learn as much as possible in the shortest time possible. Most will send you a worksheet or questionnaire to gather the information ahead of time. It can be a long set of questions because they need to know as much as possible about your financial situation. This includes your income, your assets, your debts, your tax situation, and any other information that might affect your financial future. They need to get to the facts and goals to assess the future of your finances so they can offer their suggestions and recommendations on your short term and long term courses of action. It is unfortunate that I have to tell you that this method is coming up a bit short in its possible impact and its results. Why? Because it is all about money. We do need money in our lives for sure but money is not our life, so let’s not start there.
We need to plan our lives first and then seek to integrate our finances to our chosen path. This is the best way to get to be the best you and living the best life. For sure it is necessary to understand your current financial position, think about where your current path is taking you and find solutions for financial issues as soon as possible. Holistic comprehensive financial planning is good at this but it provides weak answers to the whys.
So Real financial planning introduces the idea of life planning. Life planning should be considered the first part of financial planning in the financial planning process. For sure, the first goal for the planner is always to get to know you. Know Your Client is a foundational concept in the investment industry. But know what? Just your financial situation and your perceived surface goals? Life planning is like “Know Your Client” on steroids. It will allow your planner to truly aspire to do what is in your best interest because they know who you want to be and what life you want to live. How can your planner truly be a fiduciary unless they know the true YOU?
So before next reviewing your finances or first considering your finances, stand back and consider that your finances should not determine your life. Rather your chosen life should be supported by your finances. What is required of your finances to get to the best you and to live the best life? And be sure of one thing. This will take you into some uncomfortable discussions with your spouse and or planner. It is not easy to have such intimate and personal conversations with an outsider such as a planner. It will also possibly reveal some great disparities of thoughts between you and your spouse.
I will leave it to a future article a detailed description of life planning. In the meantime, if you already have a planner or advisor, before your next visit to your planner/advisor, ask yourself if he is in a position to truly help you get to the best life for you. Does truly know you? Does she/he know your values, your beliefs, your worries and your sources of joy? If you do not currently have a planner and are seeking one, add life planning on to the list of important attributes for the selection of one.