Is The Traditional Financial Planning Process Shortsighted?
- Created: Thursday, 07 April 2011 10:41
When the College for Financial Planning’s annual “Trends in the Financial Planning Industry” report was released, it revealed that 50 percent of CFP practitioners don’t prepare comprehensive financial plans. While the Certified Financial Planner Board of Standards has provided our industry with outstanding education and ethical standards, I think we’re missing a great opportunity to enhance the traditional financial planning process.
Financial planners are taught that after we have our proverbial “meet and greet” with a prospective client, we should gather information and documents about their financial situation, financial goals, risk tolerance, and time horizon. In theory, this sounds great – and in application, it often works just fine. But is “just fine” good enough for your clients? Is it really providing the best possible solution and service to them?
Here’s what I’m proposing: before jumping right into a client’s financial details, take a step back to learn about the client’s core values, interests, and aspirations. When you understand who your client is as an individual, what matters to them, and their grand vision, you can evaluate their financial situation in a much more meaningful way.
- Core values. Your core values come down to your nature and nurture: which values influence your attitude and behavior? These are a reflection of your principles and define what you feel is most important in life.
- Interests. What do you have an interest, passion, or desire for? If you could donate a million dollars, which causes would you support to make the world a better place for yourself and others?
- Lifetime goals. Unlike financial goals, these are the achievements you wish to accomplish in your lifetime. Articulate three categories. What are the things you want for yourself, the people you love, and the causes you believe in?