“The unexamined life is not worth living.” —Socrates
I am an evangelist for financial life planning! I preach it, practice it and donate it to help others. Everyone must do it or face consequences! I studied it for years with a CFP and a GGU MS in Advanced Financial Planning. Life planning is the basis of all other articles published here on debt, college, real estate, retirement, insurance, living trusts, stock options and investments.
Planning involves therapy, accounting, career planning, economics and finance. Planners consider exterior finance in the news—taxes, inflation, recessions, wars and estate laws—but begin with focus on interior life enshrined in open-ended and free-flowing conversations about financial goals and dreams. This contrasts to the salesperson’s focus on timing “Now or never” and individual products—”Buy my hot stocks”—with the subtle pitch that “More is better.” CFP’s swear to act as trusted fiduciaries who help clients use core principles to plan flourishing lives.
CFP’s are not just portfolio managers for the rich. Financial life planning is all about self-discovery and self-improvement. It is simply a “better way of doing financial planning which considers life issues and attitudes about money before giving advice” (Roy Dilberto). Life planning connects finance with psychology and master’s students take therapy classes to gain empathetic listening skills:
- Connective listening to see how your social, cultural or religious background shape your views. (The “We” in finance.)
- Money history studies: What money memories affect your current attitudes about savings, risk, etc.? (The “I” from childhood.)
- Money meaning stories: Does money bring freedom, power guilt, social connection, security, etc.? (The “I” of the present.)
- Financial coaching to realize financial goals. (The “I” going forward with therapy.)
In dream sessions, the life planner listens, builds trust, and interviews effectively to understand clients even when the issues are delicate and cherished others are involved. Planners assign games and devices to draw out money histories and money meaning from people who haven’t yet verbalized desires or committed to change. Charts of complicated families aid goal planning based on emotional relationships. Clients discover themselves in four revealing categories:
- Money avoidance to live in denial (Jefferson, Burt Reynolds).
- Money status creating impressions (The Great Gatsby).
- Money worship that ignores humanity (Uncle Scrooge).
- Money vigilance with self-control (Jean Valjean).
After dream sessions, Life Planners collect documents about the client’s present status—tax returns, insurance, brokerage statements, living trusts—to do accountant’s work—income statements and balance sheets. Current budgets form the basis of future budgets. Financial architecture then takes the form of a 40-page comprehensive financial plan with mathematical projections and multi-colored graphs frequently focused on portfolio changes for retirement or second life planning.
But one-page summaries with good discussion mean more. Plans contain risk questionnaires which help clients balance opportunities to accumulate wealth with fears of death, disease, taxes and market losses. Investments drive plans forward while diversification, tax planning and insurance avoid pitfalls. Ultimately, college savings, trusts and estate planning generate clients’ legacies. At the planning stage, we do not choose particular stock, bond or realty investments.
For implementation, planners help clients create new budgets, revise estate plans, modify insurance policies or establish 529’s for college savings. With expert advice, advisors recommend insurance policies or particular stocks based more on client values than current market opportunities. It is difficult enough for money managers to beat the market after fees, and the successful ones won’t advise average clients, so planners justifiably use indexes (bundles of securities). Market timing frequently backfires.
Going forward, we all want lower taxes, cheaper insurance, sufficient retirement resources and higher market returns with lower risk—but all must contribute to our end goals. Financial Life Planning is a process, not a piece of paper. My best clients pepper me with regular questions and seek a second opinion on all major financial decisions. Death, divorce, disability, disease and unemployment interrupt life but all must rise to the challenges. Regular rebalancing of portfolios and reassessments of investments provide opportunities for conversation and reworking plans, as do yearly tax returns. The Nautilus journey into self rightly ends with better financial health and superior inspiration.
Robert Arne, EA, CFP, MS, of Carpe Diem Financial Life Planning, gives holistic financial advice as his client’s fee-only fiduciary. He serves mostly Santa Cruz Mountain dwellers. These articles must not be read as personal financial, mortgage, tax or investment advice; consult appropriate professionals. Learn more at www.carpediem.financial.
