Updated: Jul 11
Over the decades, financial planning has taken many forms; from the stock broker who wants to make you rich to the salesperson who wants to sell you insurance and everything in between. Most recently, there has been an emergence of what they call independent firms and advisors that offer “comprehensive” financial planning. Every advisor has differing processes, niches they work in, and service models but almost any time I talk to a new prospect, their understanding of what a financial advisor does hinges on the word “financial.”
There are images of financial graphs and charts that are beyond the scope of their own knowledge (which is obviously why they are looking to hire a professional). People look to an advisor to invest their money, to help them make financial decisions, and to protect their family’s wealth. What often does not come to mind is the emotional and psychological elements to a financial planning arrangement.
Money is undoubtedly one of the most emotional things in our life. There’s a reason that divorcees often state it as the number one contributor in their divorce. We are literally dependent on it as a species to live, so naturally it’s going to create significant feelings. The hard part is that every single person has a slightly different perception of money in their life. For some it’s evil, for others it’s all they have ever strived for, for many it’s a means to an end; retirement. What I didn’t realize when entering into the financial planning world is that looking to understand someone’s feelings, mediating difficult conversations, and facilitating meaningful exchanges about money creates more impact than simply hiring someone to “manage your assets.”
There may still be a few people who don’t want to discuss their deepest fears and emotions about money and I’m sure for many advisors that may not have been their intention in getting into this business, but in my humble opinion this is the most important skill set we need to have as financial advisors, (of course literally having the competence/training to do the job is table stakes).
To be clear, I’m not stating that we are licensed or are in any way acting as a therapist/psychologist/psychiatrist and certainly aren’t replacing them. I’m contending that there is a lot of real value in a financial planning arrangement where the advisor isn’t just managing money, helping choose the right products, or putting together a colorful stack of papers called a “plan.” Understanding a client’s fears, flaws, interests, and dreams is what helps both you, the client, and us, the advisor find purpose in life. We are all here to live the exact life we want and no amount of money alone can define all the objectives you have and what the money is working for.
One of the more forward thinking financial advisors in this space is George Kinder of www.kinderinstitute.com , where he describes his approach, something he calls “Life Planning.” He isn’t the only advisor out there that is changing the way we think about financial advising so when you’re searching for a financial advisor, maybe consider someone who recognizes the importance of both the financial and emotional fundamentals in financial planning to make it the best possible relationship.
Times are changing and it’s time we change our understanding of a satisfactory financial planning arrangement.
Have questions or want to get in touch? Email our founder Maddi Napier at email@example.com