April 23rd, 2011
Our Comment by J. David Lewis – Several days ago, a Board Member for National Association of Personal Financial Advisors and a colleague I respect a great deal, asked me to help with a definition for the term “financial planning.” Having taken the time to consolidate my thoughts, I decided to make the exchange public.
I am working on developing a definition of financial planning. Short and sweet. I am asking some colleagues whom I respect to take a stab at it. You wanna give it a try?
Thank you for the compliment. Coming from someone with your history, the request is humbling. You said “Short and Sweet,” which I must leave to you in crafting a definition from a variety of contributors. I have written a few words I consider worthy of consideration as a building block for a definition that will resonate with me – hopefully others. I write so much to give these few words my context for them. I am using a different color font for the words I consider most significant.
My vision for financial planning goes all the way back to one event in my memory. As a banker, about 1981, a “financial planner” who was affiliated with an arm of that bank did his sales pitch to a group in the bank lobby one evening. He opened the meeting by saying that a financial planner was someone with extensive knowledge of many aspects of personal finance, from deposits and loans through estate planning, investments and insurance. My experiences from my family’s bank before that job told me immediately there were many people who needed that service. Being young – and drinking from the company cool-aid – I believed this guy brought our bank customers a great service. Of course, he proceeded to sell life and disability insurance - then limited partnerships. If they had any money left, they got mutual funds. I was severely disappointed, but never lost that definition, which was later refined when I discovered the existence of NAPFA in 1984. I founded Resource Advisory Services in 1985 and joined NAPFA in 1986.
The Resource Advisory Services Mission Statement is:
“Developing relationships that help people build AND enjoy wealth, through our commitment to excellence in comprehensive financial planning services, where we gladly accept fiduciary responsibility for understanding and serving each client with an exceptional level of ethical integrity.”
While this statement uses “financial planning” without defining it, the first item of our Vision Statement sheds light on the essence of what the term means to me (us):
“I want Resource Advisory Services to be known as a place where clients can trust us with every detail of their personal financial affairs, not only because of our high level of ethical integrity, but also because we have the ability to understand their personal and financial needs, and arrange for efficient and effective services that will help them enjoy their wealth.”
There is More to Money than Money® comes right out of these two foundation sentences. The concepts of relationships and enjoying wealth have a great deal of importance to me in financial planning. It is not all about building. It has more to do with helping clients have a clear and realistic understanding of how strong they are financially and whether they are making progress at a rate that is likely to eventually help them feel they are secure in their financial needs. Is there reasonable evidence for the client to feel secure at the level of wealth they have now? Making it clear that some clients do not need more wealth for their stated goals seems to have been our greatest contributions for more than a few clients. As they see unfolding evidence this is true, their liberation gradually blossoms. It is beautiful. When they need more, helping them see progress adds to their feelings of security and enjoyment, even if they are far from their goals. In some cases, it seems to have been an exceptional service when they saw that a stated goal was just not feasible without sacrifices they were not willing to make or just completely impossible no matter what they did. Some of these seem to take pressure off themselves, adjust to the disappointment and feel better in time. Of course, a few didn’t want to see the circumstances and decided not to be clients. The various segments of CFP® philosophy are tools, not the essence of building and enjoying wealth. I think the idea of helping clients balance building and enjoying is at the essence of financial planning.
I hope this helps you and others as you choose the words that eventually become the NAPFA definition for financial planning. Thank you for working on this. It is important. If you have drafts you want me to comment on, I will be glad to tell you what I think. I have opinions on many things. Apparently I am genetically incapable of being embarrassed about expressing them.
Contact J. David Lewis directly with email@example.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985. National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986. He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 52877