Broker Check

Financial Planning

October 05, 2021

What is Financial Planning? We’ll in 1999 it was an industry buzz word. And since that time the financial services industry as well as what financial planning looks like has changed. In the early years several large, well established and well-intentioned firms build entire departments around delivering Financial Plans.  These voluminous, bound documents were maliciously check and reviewed for accuracy and adherence to the strict parameters of compliance the industry is known for. In recent years there has been significant increase in the number of software programs claiming to provide a financial planning type of experience.  So, is the benefit of Financial Planning the finished product or is it the software or program you use?  I say, neither. The traditional financial plan attempts to predict an outcome that, in some cases, is years if not decades into the future. In a field where the variables and assumptions are too numerous to count.  Think about forecasting the weather. We joke about it. “They cant even get tomorrow right!”  You look at your phone and you can get an idea of what you make experience over the next few days and that may have some relative accuracy. But looking at the “long-range” forecast, the next few weeks, you probably only pay attention to the temperature trends.  Beyond that, what’s the point? There are a few people out there that will pick up a Farmer’s Almanac and look to see what’s in store for the coming year but how relevant is that to your own life? I understand that there are a lot of very complicated variables involved with predicting weather.  Guess what, there are nearly countless variables that need to be considered when forecasting long-term returns for markets. And what about your life? Would a five year or ten year younger you have predicted what and where you are now? Did things happen in your own life that you didn’t expect? Now we are going to make economic forecasts AND predict your life’s path at the same time with a Financial Plan – really?

So, why bother?”  Because like so many things in life the real value is found in THE PROCESS not THE PRODUCT. If your “plan” or idea of Financial Planning is receiving a bound note book or picking the right software you’re missing out on the most important part. The conversations. Completing a fact finder or data sheet then giving your advisor a stack of documents so that they can turn around and make recommendations cheapens the experience. I believe that the real value with the financial planning is in the process. The value of the planning process should have a positive correlation to the quality and depth of the conversations you have with your Financial Advisors. I have seen it far too often. The creation of the plan becomes the goal. Look, I’m all for having a Financial Plan but the plan itself doesn’t do anything. One example of what I am trying to express may be illustrated by someone attempting to hit a target body weight (or more importantly a specific BI (body index)).  If the goal is 175 pounds, great but that’s just a number. The real value is the process one undergoes to get to that number. This usually involves better decision making, informed food choices and an improved life style. Its not the gym you joined or the brand of equipment you purchased. It’s the process and your belief in that process that will ultimately yield positive long-term results.

Achieving a goal is not about what you get form reaching the goal, its about who you become along the way to achieve the goal. Financial Planning is and should be a Process. Whether retirement readiness, planning for college expenses, creating an income plan for retirement or planning your estate to create a lasting legacy, it is and should be a process. And when I say “A Process” I don’t mean the kind of process that you experience when you go to the DMV. What I am referring to is a process that involves an on-going meaningful dialog between you and your trusted advisor. A process that is both effective and creative where you can express how you want to live your life and spend your most precious asset – your time.

You, the individual, should be the starting point and the focal point of the plan. Not your money. Money is just one of the tools you build your life with.  And I believe Time is your most valuable asset. Our process reflects that belief. Start with the person and how they want to spend their time. THEN move to the tools they have to support their TIME ALLOCATION.