Thursday, September 29 2022

As financial advisors, we like to think of financial planning as a series of discrete practices woven together, such as budgeting, investment planning, insurance planning, retirement planning, estate planning, education planning, etc But I don’t think it is so. our advisors and clients really see it.

Think for a moment: what are the typical triggers for someone to contact you? A new job, a marriage, a child, a death, a divorce, a disability. Very few (real) people have an epiphany on a Sunday morning that their asset allocation is suboptimal and Google: “financial advisor with expertise in modern portfolio theory.”

No, in the vast majority of cases, life precedes any interest in financial planning, and therefore I submit that the optimal goal of financial planning, through the lens of our clients, is to:

Help anticipate or prepare, enjoy or endure, and reflect or recover from the hoped-for joys and inevitable struggles of life.

I wonder if this lens could even be used to translate the workflows of our work? Think about it: instead of a “portfolio review” or a “life insurance needs analysis”, we might think in terms of life events and transitions, such as “preparing for retirement or “starting a family” and then it behooves us to introduce the respective elements that would help our clients maximize their anticipation, joy, and thinking rather than their wallet…which would help them minimize their fear, doubt, and despair rather than their risk exposure.

I think this more intentional, life-focused approach to our work also brings more meaning to money management for us practitioners. But let me be clear, and this is a vitally important point: there is a limit to the benefits that financial planning can bring, whether in the area of ​​maximizing fulfillment or minimizing disappointments. There are many things in life that financial planning cannot prepare you for.

Yes, while adequate life insurance can help eliminate excessive suffering in the event of premature death through excess cash, it can in no way alleviate the intense pain resulting from the loss of a loved one itself. Likewise, while setting aside savings for education or a marriage can eliminate the residual financial burdens associated with these huge leaps in life, this appreciation is so far removed from the inimitable joy of these initiations that it does not even deserve not the comparison.

These incomparable moments are ones that financial planning simply cannot prepare anyone for. One of the great riches of our work is that it necessarily brings us closer to these moments, but our tools and techniques are powerless against the intensity of these experiences. So let’s act with humility and use the only appropriate tools, not of financial planning, but of humanity: empathy, appreciation, presence, congratulations.

PS I strongly believe that we absolutely (and perhaps financial advisors especially) need training to be better humans, and that it makes us better advisors. If you are interested in references to some of these courses, please contact us and I will be happy to provide you with a list of books and courses.


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