Financial planning is a buzzword. Buzz phrase sounds wrong. The important part is “Buzz.” It becomes the sound Charley Brown and his friends hear when an adult is speaking. That is a pity, because if you look at the purpose, methods and resources, you quickly discover that the client is the real planner and the others are merely assistants.
If you look at the way financial planning is presented, you could easily miss this important variable. For almost everyone, planning is done to them, not by them.
There is presently a push to regulate the “Financial Planner” label. A good thing too. Most of what passes as financial planning today is just an artistic way to sell products. If a client cannot see how a particular product integrates with his/her life, the result will be downstream chaos. Getting rid of inappropriate product and helpers later is seldom easy.
Clients are the problem of course. They must take the lead and to do so will require an investment in learning about what the process may be. Failing to do so has long term costs. Doing it has short term costs and they are much smaller.
The process is relatively simple. Clients need no knowledge about how to implement the plan, but they must know a great deal about what they are trying to achieve. They must start far upstream from product and technique.
First comes standards and duties. Do I want to save money for my children’s education? Would I value retirement saving ahead of a bigger house? Am I patient? Can I make decisions? Can I share information with my partner? Does their preference matter? There are many questions here and there are no right answers, only the client’s preferred answer. Without these standards it is very difficult to assign priority to the steps that will come along.
The second stage is finding answers to more specific questions. What am I trying to do? What do I have to do it with? When do I need it? Most goals are the target that comes at the end of a series of steps. Like paying off a mortgage. Three hundred payments will eliminate a 25-year mortgage. Same deal for accumulating money for retirement.
Advisors can help you make sure there are no voids or contradictions in your strategic vision. They should not define that vision for you.
Their role is how? They know the tool inventory that is available. They can fit those tools to you vision and when they do, you can understand why they fit. No vision, no understanding.
Tool selection will be limited by resources. In the beginning you may need to select a tool that is incomplete in some ways, but addresses your current needs. What do you have to do it with, will be spread around many tools. That is why you need a clear vision. You cannot set resource allocation priorities without that.
Implementation is essentially just fussy work. Details. Experience and knowledge make it easier.
Without a helper, you could do the whole process. If you try, I will write you a guarantee that you will never find a complete inventory of tools to select, you will never discover the best way to integrate with other tools, and you will be unable to keep up to the changes as time passes. Worst of all, you won’t have a cheerleader/conscience to help you stay on track.
Advisors add value if you know the strategy that underlies your plan.
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. firstname.lastname@example.org 866-285-7772