Financial planning is an intangible asset, and sometimes (most times) it can be very difficult to describe the benefits of true financial planning. And to make things even more difficult, every financial plan is drastically different from one family to the next. It is tough to "sell" the invisible (aka intangible goods), you really can’t see or touch financial planning as you could a brand new shiny iPhone.
I say “true” financial planning for a reason since there is still a group of individuals who try to sneak under the persona of a financial planner. If you have encountered them in the past you will see that many of the intangibles listed below were/are probably missing. The other common sign is that after the “transaction” was complete, you probably never heard from them again…
So what makes true financial planning, and what are some of the intangibles that we provide to our clients? Well, I am glad you asked.
If you poll the general public with this question, “what do financial planners do?” I would think your most common response would be investment management. While I agree that is a piece of the pie, I would argue it is only a small piece. Most “want” help there because of the complexity and technical jargon that comes with investing. But investment management does not mean anything if you haven’t clarified your goals.
Think of it this way, you say “I want to retire early?” Great, what does that mean? Is early 35 or 55? How much do you plan to spend once you retire? Do you plan to move? Any part-time income? So, what if we could get you to say this instead, “I want to retire at 45 from full-time work but still work part-time until 55. We plan to spend $100,000 per year in expenses and would like to relocate to South Carolina once the kids graduate from high-school.” Okay, now we have something to work with! It’s similar to reading a good book, and you feel like you are a character in that book. Good financial planning is like taking a fiction book and evolving it to non-fiction, and you are the star of this book. Fun, right?
It is hard to get clear on your goals, and it is even harder to stay clear for long periods of time. Intangible #1 is helping you clarify your goals while having someone to lean on when you have to make emotional and complex course corrections (#LifeHappens).
Financial stress is no joke (Google “financial stress” and 620 million+ hits in less than 1 second). There are numerous studies linking stress and financial stress to health issues. Yikes! I am not a doctor, so I won’t pretend to know the health effects, but let’s take a second to list a few of the biggest financial stresses today.
- Cash Flow: Expenses Exceeds Income (aka Budgeting!)
- High Debt Levels
- Low Savings Rate
- Stock Market Volatility
- Emergency Fund
- Little Education on Many of the Topics
Maybe you are stressed about your current situation, maybe you and your spouse are not seeing eye-to-eye on a major financial decision (or a minor decision for that matter), what-if you had someone who understands your situation, can be there to listen, can be that neutral third party and be there to guide you? Intangible #2 is having the financial "psychiatrist" on-call for you when you need it the most, the high stress and high emotion topics listed above.
There is also a certain Zen to knowing you always have someone to ask a question, forward that weird email from HR, and verify that Uncle Fred is, in fact, crazy with his investment advice.
You get health check-ups, your car gets check-ups, your teeth get check-ups, but your neglected financial plan just sits on the shelf and rots, how rude! Maybe nothing has changed, maybe everything has changed, maybe you want to update a goal, maybe you just need someone to say that is unrealistic. Whatever the case, true financial planning does not allow you, or your plan to get out of “alignment.”
We keep a semi-annual proactive meeting schedule with our clients. I say “proactive” because we schedule those meetings no matter what, but we also give our clients the option to book additional meetings and calls when they need us, or what we like to say “on-call.” Those additional meetings can be a 30-minute discussion about family with no mention of finances, or they can be 2-hour deep dive into your financial plan with serious course corrections. Either way, the key to a well-executed long-term financial plan is staying in contact with your clients and letting them know you are always there for them.
Intangible #3 is ongoing guidance and unlimited course corrections because we know your initial plan is stale upon arrival and that most of our value-add comes after the plan creation when life happens.
Speaking of clarifying your goals, how about having someone to ask you, “how are you doing with saving 15% to your 401k?” Or “did you give any more thought to lowering your clinical hours to spend more time at home?” Or “Listen, I get it, no one wants to think about dying, but you need to get those estate documents completed.”
You hire people like me to help you meet your goals, and if I don’t hold you accountable or take your goals serious, what am I doing here? More importantly, if you don’t take your own goals serious, then maybe there is nothing for us to hold you accountable too.
Intangible #4 is accountability. I think accountability can come in many shapes and sizes. Sometimes just the mere fact that someone knows your goal can motivate you, sometimes you just need that extra kick in the butt, sometimes you just need someone to tell you it is a good idea, and go for it. We will be there to help you follow through on your commitments, prioritize those commitments, and lay out the steps to achieve those commitments.
Standing Between You & Stupid
We work with some of the brightest minds in medicine, engineering, and entrepreneurship. Without hesitation, all my clients are smarter than me, but I have the edge in personal finance. And that is a good thing to have an edge in because one bad financial decision today can snowball into a lifelong disaster pretty quickly. We are the only thing in between you and that questionable advice from Uncle Fred.
While this may sound like common sense, sometimes it's not so black & white, especially if you don’t have the financial wherewithal to know the difference. It is also very easy to get emotional with decisions, and as soon as you bring in emotion, all common sense goes out the window.
Intangible #5 is a partnership, and with that partnership, we stand between you and doing anything stupid for decades. We are here to help you achieve the best life possible, and usually, that will come from numerous small victories in the world of personal finance.
There are many other intangibles that real financial planners can provide, yet these 5 stood out to me the most and are often the ones we get the most positive feedback on from clients. Some others could include, getting organized, objectivity, proactivity, education, and many others. So in closing, don’t hire a financial advisor to just help you with investments. Don’t hire a financial advisor to buy an insurance product. Don’t hire someone who sells you something today, but you never hear from him or her again. Hire a financial advisor to help you clarify your goals, to be there as the neutral third party when emotions are high, to be there for you for decades (not just a transaction), to hold you accountable to what matters most to you, and last by not least, to keep you from doing something stupid.
Written by: Chad Chubb, CFP ®