There are two types of financial planning:
Financial planning to sell an investment.
Financial planning to solve a problem.
The former is the more common one in the marketplace. The investment adviser is encouraged by bosses, and relationship managers of the investment companies where they hold agencies, to keep work to a minimum for commercial reasons. The Time Wasters. Extra meetings solving problems are seen as wasted effort and don’t bring in additional revenue.
The brokers and their consultants are looking for delegators.
The “sell my investment” story told is about saving taxes and unnecessary fees, avoiding silly behaviours, clever markets timings and stock selection to beat market returns (a lie), that’s going to add three per cent per annum to returns after the investments have been tapped for fees. It’s all made to look mysterious and complicated, and clients are discouraged from getting involved or looking under the bonnet.
The latter is proper financial planning.
If we separate financial planning from investment sales, we can be confident that we receive proper financial planning. The advisers that do this are called advice-only financial planners.
The different skills and knowledge investment advisers must learn to be advice-only financial planners is this. These Time Wasters are to us Time Makers, for they help our clients live longer better.
Ten Time Makers Of An Advice-only Financial Planner:
1. Client activation: We train clients to be active in their finances by choosing and implementing their own investments. Individuals are more likely to make good decisions and take more action to improve their finances if they are engaged, informed, and feel confident they can take care of themselves. With practical support, you can increase your activation level over time, moving you away from being less engaged with your finances to a healthier collaborative relationship where you are an ‘active’ partner in your financial well-being.
2. Life Planning: We plan the client before we plan the money. We treat the client as the customer, not their money. The life plan must come first for productive planning. Exhaustive planning is where we plan the money first and advise the client to live their best life with the money they have. The outcome is limited living. Destructive planning is where we either only plan the money (broker planning) or only plan the life (life coaching).
3. Values-based financial planning: We identify what is important for the client. Their wisdom. From this, we determine their stage in their psychological development and whether we need to plan to meet deficiency needs in the next chapter or growth needs.
4. Purpose-based financial planning: We establish the client’s gifts and talents. We establish three types of assets.
- Productive assets (for wealth – brand, connection, skill, know-how),
- Vitality assets (for wellness – eudemonic, emotional, physical, and cognitive well-being), and
- Transformative assets (for resilience – character, network, fitness, learning).
Our life purpose is to use our gifts to help other people.
When deficiency needs are met, we focus on growth needs to know our life purpose, meet our tribe, and collaborate with them to make the world a better place. Our WILL is our contribution to human evolution.
5. Whole-person financial planning: We introduce the whole-person model or paradigm.
Stephen R. Covey describes it best in The 8th Habit (from effectiveness to greatness):
“If you study all philosophy and religion, both Western and Eastern, from the beginning of recorded history, you’ll basically find the same four dimensions: the physical/economic, the mental, the social/emotional and the spiritual. Different words are often used, but they reflect the same four universal dimensions of life.”
Here’s the thing…
If you have a deficit in one area, you have deficits in all areas. For example, wealth counts for nought if you don’t have health. Advice-only financial planners help their clients become centred. This centring is what we mean when we create wealth in every area of our life.
Everybody wants to live longer better.
6. Next chapter financial planning: Your greatest asset is a clear vision of your favourite future. You leverage this asset by being your future self now. We begin by planning the route to your next chapter. Your life story consists of chapters. We are forever planning our next chapter.
“The idea of a favourite future should be with you for your entire life, a never-ending conversation with yourself.” – Michael Clinton, author of Roar into the second half of your life (Before It’s Too Late).
7. Project planning: When we have a clear vision of our favourite future, our next question is:
“What could possibly be stopping you?”
We then create an action plan to overcome obstacles.
8. Lifetime cash flow forecasting: This is often effectively misused by investment brokers to sell more investments. “Oh, look, you have a shortfall!” A sharp intake of breath. “If you give me more money, I can plug this gap.”
Yes. Gaps can be plugged by saving if you start early enough, form a habit that you stick to long enough, and allow the miracle of compound interest to perform its magic. Few people fit this profile. For the rest of us, investment gains are lost to fees, inflation, and taxes; What you take out nets off at what you put in.
What advice-only financial planners do is identify productive resources, leverage entrepreneurial opportunities, and create sustainable livelihoods.
With client activation on their wealth and well-being, a sixty-year-old has a 50-50 chance of living until their 90s. A thirty-year next chapter (not the last) of healthy life expectancy could yield income from meaningful projects to fill the gap.
9. Proposition development: We produce an optimum strategy (a firm of endearment – using the QBL/ 4Ps of Purpose, People, Planet, Profit) for leveraging entrepreneurial opportunities with those productive resources we identified. We create sustainable livelihoods (or occasionally side hustles) using your Ikigai (reason for being). We create a business plan from what you are good at (Gifts/ P1), what you love (favourite future/ P2), and what the world needs (P3) and will pay for (P4). We drop the P&L and balance sheet into our lifetime cash flow forecast as a what-if scenario.
10. Financial coaching: Then comes execution. Here we need a detox, commitment, agency, and action. A coach, mentor, or facilitator helps.
The advice-only financial planner is solving problems, not selling investments. The advice is generic or general. It can be presented to a group of financially activated people. For example, one planner can present to an entire workforce of an employer client.
The process and tools have been developed to support one-to-many distribution. For example, we have built the world’s first customer-centred financial planning app integrated to open banking. HapNav – the happiness navigator. We activate the employees with our MoneyFitt financial education service and hand them HapNav. All for less than £10 per user per month.
Investment broker financial planners serve the five per cent of the population with over £100,000 of investable assets, helping them save money they’ve already made.
The advice-only financial planner serves everyone, helping them make money.
This point brings me to the problem to be solved…
Ten years ago, I wanted to introduce the trusted adviser to the world. I’ve done that with the world’s first advice-only financial planning network, the Academy of Life Planning. Tick.
What’s an even bigger problem I’d like to solve in my next chapter? Here it is…
“Poverty eradication is our greatest global challenge and is an indispensable requirement for sustainable development.” – United Nations, Sustainable Development Goal #1.
Provide Access To Financial Planning To End Poverty
Granting equal rights and access to financial planning will identify productive resources that can be leveraged through entrepreneurial opportunities to create sustainable livelihoods to end poverty.
Financial planning is wasted on saving taxes for society’s wealthiest, given our greatest global challenge is to end poverty.
Let the rich delegate financial planning to brokers to exploit custody for fees. In the right hands, financial planning can end poverty.
The process is as follows:
1. Identify productive resources.
2. Leverage entrepreneurial opportunities.
3. Create sustainable livelihoods.
4. End poverty.
We can bring equal rights and access to financial planning to end poverty. A pre-requisite is financial activation…
We increase financial activation levels for our customers to become their own financial planners, run their own cash flow planning tools, and make investment decisions.
This idea reduces the cost of financial planning to create equal rights and access for all. With the right sponsorship, we could even give financial planning for free.
We want more people to be financially self-sufficient.
We don’t want them to delegate personal agency to us, bankers, or their brokers. Instead, we want them to place a wall between our advice and their money.
Our mission is to activate people and their finances, so they can self-create their favourite future and create and manage the money to support it.
Take the reins.
The advice-only financial planners are here to empower you and occasionally (not constantly) support you in times of stress or change.
Our Game Plan helps you plan the next chapter of your life and puts in place the money you need to support it.
We support the 2030 Agenda of the United Nations Sustainable Development Goal #1: To end poverty in all its forms everywhere.
Find your purpose! Find your tribe! Change the world!
The Talmud states,
“Do not be daunted by the enormity of the world’s grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it.”
If Sustainable Development Goal #1 is your work, join our tribe at the Academy of Life Planning. Let’s make the world a better place for us having lived.