Great Planning Outcomes

What might you expect from a terrific financial planner? There’s conventional wisdom, and then there’s what I think. Let me give you what everyone else thinks first.

I am sure that 99.9% of financial planners will agree with fellow Transparency Task Force volunteer Jeremy Askew FPFS from London. Jeremy, you have my respect as a TTF volunteer and a great financial planner. Here’s what Jeremy says. See full article.

A comprehensive financial plan for you and your family should do one, some or all of the below:

If a breadwinner dies, your family will not be fatally compromised. They will be able to stay in their home, plans to help your children remain on track, business interests can continue, and assets will not have to be sold in a fire sale.

The same goes in the event of disability or long-term illness.

The children and grandchildren can be helped with education costs, home deposits, etc., without debt.

The current generation will be able to retire in their own time and on their terms. They will be confident they will not outlive their income. Their dignity and independence will not be undermined by up to thirty years of rising living costs (inflation).

The current generation will be able to support their parents. And never become a burden to their children.

Retirement incomes will rise to offset inflation. This rise will not be at the expense of the capital that will also grow over time and be available to support future generations.

Inheritance tax (IHT) will not force the sale of essential assets at an inopportune time. IHT liabilities will be funded out of residual capital or insured.

If you give your plan enough time and money, you’ll substantially achieve all the goals we agreed on. If you’re not given enough time, insurance will carry the plan the rest of the way. You will get the desired outcomes with enough time, money, and faith in your plan.

Thanks, Jeremy, that summarises how 99.9% of financial planners think and work.

I would go further, as I plan the client before I plan the money. I’m thinking what’s their favourite future, then put in place the finances to support it.

How might I change things?

1. I felt sorry for the breadwinner in this plan. Did the breadwinner have a meaningful life, or were they forever winning bread? Running long past the winning post of enough, on their treadmill of work existence; Sacrificing well-being, so they do not make it to old age; So they don’t get to complete their life. All for more material stuff they left behind. Did they ever get to give their gift to the world?

2. Money, money, and more money. As for the material stuff. How big does the home need to be? How much help do the kids need (and how healthy is it to give)? Is business continuity important (is the business serving a practical purpose in the world – or is it simply profit-focused)? Are the assets an absolute priority? How did the breadwinner touch the lives of other people? How will they be remembered? Did they contribute to the evolution of humankind?

3. Where are the well-being considerations? Money is a means to an end, and the end is well-being. Rather than there just being a financial payout that cures all ills, what activities do the family follow to avoid disability and long-term illness? Do they invest in fitness? Do they consider physical and mental well-being? Do they have a positive mental attitude about age? Do they have a reason to get up every morning? Do they enjoy their health as they have it? Or do they exchange well-being for more wealth?

4. Maybe the best gifts to children are our time, not money. How can we best teach our children and grandchildren lessons about money? Is it by making large gifts? So they never have to work for things? Or work things out? Or is it in the principles we can teach behind making and saving money? Does there need to be an element of tough love in our succession planning? Do we need to pass on our values as well as our value?

5. “Retire, and death soon finds you.” In Okinawa, in Japan, people live longer and age better. Do we wish to condemn our clients to a cliff edge called retirement at 60 (or earlier), when by continuing meaningful projects, longer life and health expectancy can be increased? Our clients with the proper knowledge can expect to be “young-old” to age 90. Might this be a better option? As Stephen R. Covey said, “If you want to die early, retire to golf and fishing and sit around swallowing prescriptions and occasionally seeing your grandkids.”

6. Who’s zooming who? Is the older generation more likely to be a financial burden on the younger generation? Or is it the other way around? Baby boomers are likely to be the wealthiest generation for a century. Perhaps more focus should be given to wealth creation and intergenerational transfer of wealth. I didn’t say saving money already generated; I said generation. Creating assets that generate income for future generations.

7. Giving away wealth during your lifetime. Wouldn’t tax bills better be mitigated by planning rather than tax incurred and paid for by a pooling of risk investment vehicle (insurance)? The insurance route means clients can expect to pay more after fees than the actual tax bill.

For decades we’ve been blinkered. We’ve learnt skills from insurance companies and banks. They’re deeply ingrained ways in normal industry-accepted practices. These money-centred skills we surely must unlearn if we are to serve customers well and deliver better outcomes.

For me, the idea of such “Great Planning Outcomes”, though considered the norm in our industry, is often no more than a selling tactic to sell the maximum amount of product. In other words, the industry says, hand over as much of your hard-earned money as you can to us to keep for your lifetime to tap into for fees, with stark fear-based messages about their nearest and dearest.

Don’t get me wrong. Financial products have a place in financial planning. That is a place to alleviate fear. Fear of risk to our survival, safety, and security. There is a point called enough. When people lose their fear of running out of money, they can focus on personal growth objectives. Desires like working out who you are, finding your tribe, and contributing to making the world a better place for us having lived.

My different approach isn’t some impractical and foolishly idealistic fiction. It’s based on the new psychology of human well-being: An exploration of the influence of ego-soul dynamics on mental and physical health, by Richard Barrett.

“Wrong does not cease to be wrong because the majority share in it.”
― Leo Tolstoy, A Confession.

Sometimes it helps to challenge norms and see things from a different perspective.

Please get in touch with me if you want to learn more about the game plan approach.

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