Today, I’d like to get your opinion on something I’ve been thinking about . . .
But first, a question or two:
- What comes to mind when you think of a “financial advisor”?
- Or what do you associate with the concept of “financial planning”?
Each of you likely has your own perspective on these and other aspects of the financial services industry.
And your perspective is shaped by a combination of your own experience, the experience of others you know, and what you hear and read in the media.
For example, Bernie Madoff was a financial advisor (and a crook). His wrongdoing can only skew your perspective of financial advisors negatively.
And for some of you that have sought professional financial planning help, you’ve undoubtedly had a positive experience.
But others of you might have “experienced” financial planning as an elaborate life insurance sales pitch. Or a pitch for some other financial product.
In my own experience, many people who are introduced to me by my clients and other professionals I know assume I’m an investment guy first and foremost.
And yes, investments are an important part of the work I do with my clients.
But they’re only a part.
We also talk about retirement, educating children or grandchildren, caring for aging parents, estate planning, tax planning, insurance needs, charitable giving, and a long list of other things that are important among my clients.
Yet, rather than try to come up with some cutesy title or name for the work I do, I have and will likely continue to refer to myself as a financial advisor.
But “financial planning”?
I’ve been thinking about this and wonder if I can’t do better.
So here’s what I’ve come up with:
Collaborative Retirement Scenario Management
OK, first impressions . . . what do you think?
Like it? Hate it? Confused?
First, let me be clear. I’m not trying to change the industry or its terminology. I expect “financial planning” isn’t going anywhere.
But for me, I like calling things what they are. And after spending a lot of time thinking on this over the past few months, I believe “collaborative retirement scenario management” is an improvement over financial planning.
Hopefully, the words, both on their own as well as strung together, are pretty intuitive.
But having been a financial advisor for 26+ years now, I’ve seen a lot of so-called financial planning, and I think there’s a lot of room for improvement.
First, I very deliberately started with the word “collaborative.”
I don’t believe financial planning and advice should be delivered AT you. Instead, it’s something that should be done WITH you.
This includes everything from gathering information to exploring what’s important to assembling an initial scenario. And evaluating alternative scenarios.
Also, I like collaborative because financial planning, in my opinion, isn’t a one-and-done deal. At least not when it’s done the right way.
While my clients – women and their families in their 50s and 60s – are focused on preparing for retirement, they also have a whole host of other values, goals and priorities that are important to them and those they care about.
Yet, regardless of what else is on their financial radar, retirement is always something that needs to be considered and prioritized alongside other, perhaps competing, goals.
One of the primary challenges of personal finance and financial planning is deciding what trade-offs you’re willing to make to prioritize the things that are important to you in life.
For most folks I talk with, retirement is usually at or near the top of their priorities list.
I like “scenario” because it feels a little less permanent than “plan.”
And as I’ve written before, ongoing planning is much more important than creating a plan and letting it grow stale and increasingly inaccurate with age.
As Ferris Bueller said, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”
Likewise, your financial plan could miss things too. Unless you regularly review and update your plan as you get new information (and more experience) along the way.
Also, your “financial plan” is really nothing more than a collection of scenarios anyway.
When you retire. How much you spend. How much you save. How much you give. How much risk you’re willing to take. How much risk you need to take.
In fact, all of this is really a set of guesses. Hopefully they’re educated guesses, but ultimately we don’t know what will happen in 5 minutes from now. So how can you or I be expected to know what will happen 5 years from now?
I can’t. You can’t.
And if you believe someone can predict the future, then I can only wish you the best with that.
So that’s why I prefer “scenario” instead of “plan”.
And finally, I debated between “planning” and “management” but finally settled on management.
Planning strikes me as perhaps a little too theoretical.
Like you’re planning to do something versus actually doing it.
For example, you could plan to ask for a raise, go on a diet, exercise, or try something new, but planning is very different from doing. And even if you work with someone to develop a financial plan, its wasted effort if you don’t put it into action.
To me, management feels a little more like action-taking. Like we’re doign something and managing the process as we go.
I could go on. In fact, I may revisit this idea in the future.
But I’d like to know what you think.
The reason I started down this path to begin with is to make it a little easier for you to describe what I do to others.
According to Cerulli Associates, there are estimated to be just over 300,000 financial advisors in the U.S.
And many of these advisors offer “financial planning” even though the actual experience from one advisor to another can be quite different.
With “Collaborative Retirement Scenario Management” I’m putting my own stake in the ground and attempting to be more clear and concise about what I do for my best clients.
Again, it’s work in progress, so I would appreciate any feedback — good or bad.
At the end of the day, what I do is for people like you. So your opinion matters more than mine does here anyway.
P.S. > Apparently, we’ve all been rearranging apps on our phones the wrong way. Here’s the easier, faster, why-didn’t-I-think-of-that way to do it.