The Tip of the Iceberg: Beginning to See what ‘Comprehensive’ should Really Mean

In September, I attended an amazing conference of financial planners and advisers from all over the U.S. who think just like we do about planning.  I took a lot of great lessons from that time, many of which I’ll be sharing with you over the coming weeks.  One conversation, however, was so impactful on me that I immediately came home and put together a quick video on the topic.

This “semi-short” (12 minutes) and “semi-technical” (graphs, but no deep calculations or theory) video is here to help you change how you think about your financial adviser.  As I’ve shared with many of you, one of the areas in which I’ve struggled with True Life Financial Planning (TLFP) is helping new clients understand exactly what it is that they’re getting in exchange for their monthly retainer.  I see this problem as having two parts.

  1. As I’ve stated elsewhere, we’ve been suckered into believing that conversations with our financial advisers are supposed to be about money.  Most of the new clients that I work with want to start by showing me an investment statement, insurance policy or the BBB* plan that someone put together for them years ago.  Financial planning is about life.  It’s about helping you achieve the life you’ve been called to life, your True Life.  Sure, we need to talk about money at some point in the process.  Money is the conduit by which our internal dreams and desires are manifested in the real world.  Doesn’t it make sense to sort out what those internal messages really are before we begin construction?
  2. Once we complete the initial life planning process, each client’s relationship with TLFP can take a different form.  For some clients I’m a sounding board and for new ideas about how to earn more income.  For others, I spend time researching the money aspects of their current “biggest financial decision ever.”  For many, I’m a coach or (shudder) accountability partner to help encourage them when the going gets tough.  I even spend time with clients’ other advisors (tax, legal, etc…) to work through how various aspects of their work fit into the overall plan.  Once can begin to see why it’s tough to give a short answer to the question of, “What do I get?”

The conversation in this video begins to address these two issues through a simple example.  An example client is presented who earns $40,000 per year, receives 3% raises annually, saves 5% of income, earns 8% on those savings and does all of this over a 40 year career.  The initial question I’d like to ask you is this:  “If this client walks into a typical financial adviser’s office for help with having a bit more in the retirement bucket at the end of 40 years, where will that adviser usually focus?”  I don’t know about you, but my experience has been that the adviser will start by attacking the 8% investment return.  If she doesn’t stop there, she may recommend that the client consider working a few more years.

Why anyone who stops there should ever be allowed to describe herself as providing “comprehensive” financial planning is a mystery to me.  In the video, you’ll learn see just how impactful (or not) that possible increase in the investment return might be, as well as some other levers that can be pulled for the client’s benefit.  If you’re not working with an adviser who at least asks about these things, you might consider looking for one.  I suggest you start with the XY Planning Network directory.

Finally, I’d like to address something that I left out of this video.  I stopped short of delivering an important part of the message that was originally shared with me.  Why don’t most financial advisers talk about all of these things?  The line of thinking that was presented at the conference was that it comes from the very way my industry is constructed.  Most advisers don’t talk about helping clients increase their income or find work that they value so much they’d never dream of leaving it because there’s no product that can be sold in relation to that advice.  In fact, the only lever that you can pull in this example that’s tied to a product sale is the one that most advisers go after immediately: the investmet return.

I’m going to go one step further here and add my own opinion about why that approach is so popular.  American consumers have been so well marketed to for generations that we have come to believe a very simple misconception: Whatever problem I have, there’s something that I can buy to fix it.  It comes as no surprise then that something along the lines of, “Just buy THIS investment mix, and your problem will be solved,” is such an easy pill to swallow.  The other actions that you can take to enhance your life take work. 

Find the right financial adviser so you don’t have to face that work alone.

*BBB Plan: Big, Black Binder Plan.  Typically something that was prepared for a client a number of years ago, contains some form of “implementation checklist” that hasn’t been reviewed or acted upon since 6 months after it was prepared.

A very special thank you to Joshua Sheats of the Radical Personal Finance podcast.  Joshua shared this message with me and 150 of my closest friends at the 2015 XY Planning Network Conference in Charlotte.  If you haven’t already, get over to The Radical Personal Finance Homepage or find him on iTunes, Stitcher or your favorite podcast provider.  Joshua is working hard to help fix our industry, and I have no doubt you’ll benefit immensely from his knowledge.  I know I have.  Finally, if you DO value his work, I strongly urge you to support Joshua by contributing to his show.  You can do so in ANY monthly amount, and he deserves every penny.

The Tip of the Iceberg: Beginning to See what ‘Comprehensive’ should Really Mean

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