Beginning At The Beginning Works Better

An article published on the TIME magazine site on the 24th of May points out something that is wrong with financial planning.  Advisors sometimes want to start in the wrong place.  It is short and you can  see it here.  “What you need to tell your financial planner”

The article suggests that it is crucial for the client to be honest and complete with the planner.  They need all the information to work things out.  It should say that the advisor should be honest with the client and at a minimum outline the things they have no intention of dealing with.

Notice first that the client is the real planner and the advisor is an assistant.  The advisor only becomes the planner if the client fails to retain control of the decisions.  Here is why it matters.

The process described is tell me what you own.  That is the strategic question, “What do you have to get it with?”  If you start there, it is pretty easy to overlook the what are you trying to do, and when do you need it, questions.  Certainly, the order of things will be fuzzy. The advisor may inject their view of those, but that only works most of the time.

It is like a doctor who knows the answer before all of the information has been processed.  The advisor is categorically wrong to start with “what with” unless the “what for” questions have been thoroughly described, tested for completeness, checked for conflicts and a system of prioritizing actions has been established.

No client can make a personal and reasonable assessment of a course of action proposed by others when neither has a strategic overview as a template for comparing choices.  The objectives of the plan should be personal and you cannot get there from “What do you have?”

You must begin with a clear idea of the difference between strategy, (the purpose and timing and limits of the plan) and tactics, the methods to address the strategy.  Unless you have asked for a specific tactical answer to a question that you have developed yourself, mistrust advisors who start in the wrong place.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com 

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