Real Financial Planning

Real Financial Planning

Few people have been more influential to my financial planning philosophy than Carl Richards. Carl recently wrote a piece outlining three major traits that “real” financial advisors must have (What It Means To Be A Real Financial Advisor).  Advisors following these rules pass the “Would I send my mom to you?” test.

  1. They are fiduciaries who put clients’ interests ahead of their own.
  2. They are totally open about compensation and fees with clients.
  3. They invest based on data and evidence, not stories and friends.

Pretty solid list, right?

Someone once told me that the way I describe my role as a financial advisor sounds more like “life planning” than “financial planning.”  I responded rhetorically.  “What’s the difference?”

Taking some inspiration from Carl, I’d like to suggest two other traits that I believe set the foundation for everything “real” advisors do.

  • They establish a deep connection to “The Why?”
  • They embrace uncertainty.

The Why?

Effective financial planning must recognize our uniqueness.  We all have different histories, different values, and different aspirations.  We don’t all fit into the same mold.   It is a financial advisor’s job to flush out the things that are most important to us.  Good financial planning means a reason and purpose can be attached to each financial decision we make.

In their book Personal Benchmark, Charles Widger and Daniel Crosby wrote:

“By attaching purpose (the “Why?”) to our investment strategies, we identify what matters to us personally.  We establish our own “Why?,” making it almost effortless to do the right thing in our investing and in our lives.  This makes us more productive and our lives more meaningful.”

This simple statement says so much.  Personally, our “Why’s” are things like; to fund our grandchildren’s education, to plan a legacy, or, to retire abroad.  These are our goals.  The reasons why we work, save, and invest.

Facilitating deep conversations that uncover the “Why’s” is perhaps the most important thing a real financial advisor does.  Without these discussions, a plan has little value.

A Journey Without a Destination

Real financial planning is also not transactional.  It isn’t about a 150-page document filled with tables and charts that reduces the next 30 years of a family’s life to precise calculations on a spreadsheet.  It is a continuous process that acknowledges the fluidity of our lives.  It is about uncertainty, thinking about the unknown and adapting to change.

In 1958, Hunter S. Thompson wrote a letter to a friend who was seeking advice on finding purpose and living a meaningful life.  His advice is amazing, especially when you consider he was only 22 years old at the time.

“In short, [a man] has not dedicated his life to reaching a pre-defined goal, but he has rather chosen a way of life he KNOWS he will enjoy. The goal is absolutely secondary: it is the functioning toward the goal which is important. And it seems almost ridiculous to say that a man MUST function in a pattern of his own choosing; for to let another man define your own goals is to give up one of the most meaningful aspects of life— the definitive act of will which makes a man an individual.”

Goals are a product of the lives we live.  The experiences we have every day shape how we think and feel.  Our goals tomorrow may be much different than they are today.  That’s the beauty of life.

We should be careful to not fall into the trap of building a life around a goal like “retire at 65.”  We must think deeper than that.  What inspires us?  Historically, retirement was an age where it was likely we could no longer be productive in the workforce.  Our skills would be diminished so saving for retirement was more of an insurance policy than a life planning technique.  Today, we live much longer and have an uncountable number of pathways available to satisfy our wants and needs.  Freedom doesn’t start at age 65.  We should always be thinking about how we can use what we have to do what we want.

British philosopher Alan Watts believed that life was not a journey to retirement.  He thought far too many people live to retire and in the process cheat themselves out of an exciting existence.  Speaking of Watts, Richard Branson shared this perspective:

“Like him, I don’t believe that retirement should be the goal… instead I think happiness should be. One of my favorite quotes comes from John Lennon, who said: ‘When I was five years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be when I grew up. I wrote down ‘happy’. They told me I didn’t understand the assignment, and I told them they didn’t understand life.’

One epic great thing isn’t coming – everyday can be great, so long as we live in the present, stop to enjoy the moment, and find the beauty in each and every day. “

Meaningful Planning

Real financial planning involves helping people use the resources they have to design lives that they love.  It is as much about planning lives as it is planning finances.  The art of what real advisors do is as important as the science.  Yes, the math, the numbers, and the projections do matter but it is only through a deep understanding of “The Why?” and ongoing adaptations to change that financial planning becomes truly meaningful.

Further Reading…

The Invisible Alpha

At Ariadne, I work closely with families and individuals to organize their finances and utilize their resources to design a life they love.  If you are interested in a straightforward, no-gimmick approach to financial planning that focuses on you and your needs, don’t hesitate to get in touch.  I’d be happy to have a conversation.

Tim Brennan


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