It starts with a speed-dating-like vetting process, where you court a few potential candidates and cover the basics of the advisor's credentials and fee structure, as well as what you're looking to get out of the relationship.
If you two click, the union progresses to the next level, and the conversation gets more personal. You reveal the details of your financial life -- your assets, liabilities, goals, favorite movies. The advisor takes that information and creates a formal plan, with dates and dollar amounts and various scenarios and recommendations, all illustrated with charts and graphs, and maybe a stock photo of happy retirees making footprints in the sand as they walk hand-in-hand back to their beachfront property.
With your plan prepared, you're filled with a sense of achievement and forward momentum. Then life gets busy, and the initial burst of excitement fades. Months later, you still haven't fully implemented the plan. Or, worse, you follow the plan to the letter and finally reach a key financial milestone, only to discover that the achievement isn't as fulfilling as you'd thought it would be.
It sure seemed as if you and your pro had found the perfect route from Point A to Point B. The numbers all add up. The recommendations seem perfectly sound. The financial road map clearly shows the path to achieving the vision you and your advisor plotted out.
But there's a huge difference between the fleeting satisfaction of checking something off your to-do list ("Increase IRA contributions -- check. Rebalance 401(k) -- check.") and the excitement of knowing that your plan reflects your values and will help you live the balanced, happy life you've dreamed of living.
Where most financial plans fall short is that they fail to spark joy -- the deep joy that inspires follow-through and serves as ongoing motivation to stick to the plan for the long term. That's because most plans underplay the personal side of personal finances and skew heavily toward the accumulation and preservation of wealth.
That's all well and good to a point, but...
It's not just about making the numbers add up
Your advisor asks: "What are you saving for? What are your goals?"
You answer: "early retirement," or "opening my own business," or "a new car," or "a weekend lake house for my family."
All are fine goals at a glance. They're tangible, they're quantifiable, and they make for easy targets because each has a black-and-white, bottom-line dollar amount that can be targeted. They answer the superficial question that's posed and give your advisor something to aim at.
And that's exactly where the problem lies.
A financial bull's-eye is not the ultimate measure of whether a financial plan is a success. As all the research shows, money is not the true currency of happiness. A plan that's based on only a fraction of what gives you joy and purpose is a half-baked plan at best.
The must-ask question: What is the goal of your goals?
Before crunching numbers and allocating dollars, you need to take a step back and identify why you want the things you want. This is what financial planners trained as Registered Life Planners are taught to do. ("RLP" is the official designation.)
I learned about this special branch of advisors years ago at a seminar led by the founder of the life-planning movement, George Kinder, a Harvard-educated economist and practicing financial planner and tax advisor. He illustrated exactly how the traditional industry model falls short:
- The scenario: A client tells the financial advisor that one of his or her goals is to buy a lake house getaway for the family to use.
- The goal: The client wants a down payment for a lake house.
- The traditional financial plan: After numbers are crunched, a plan is presented, wherein five years (three if especially motivated), the client will be able to put a down payment on a lake house if able to consistently earn a top-tier performance bonus at his or her job and to take on a few more clients through the side business.
Here, the financial goal gets met. But the underlying goal -- the real goal of the goal that was never identified -- gets waylaid because, it turns out, it wasn't the lake house per se that the client desired. What the client was after was the chance to bond and spend quality time with his or her children while they were still young. However, if the client pursues the three- to five-year plan, he or she ends up working more on nights and weekends to bring in more money for the down payment, thus spending less time with the kids.
Had they both dug a little bit deeper and had a more profound conversation to discover the "why" behind the "what," they would have crafted a very different plan, perhaps finding an affordable cabin to rent on the weekends and taking on fewer side projects during the summer so as to spend more time with the family.
Or maybe they would have found that the lake house was simply a stand-in for what the client truly desired -- simply less time at the office and more time with the family. Time, it turns out, is often what we crave much more than material things.
How to go beyond the boilerplate goals
If you want to tiptoe into the realm of life-and-money deep thoughts, start with this "Financial Self-Reflection" worksheet.
For some deeper financial soul-searching, head to Lifeplanningforyou.com, the website Kinder launched early this year to give the masses free access to the exercises that his trained RLPs use with their clients. You can take what you learn from the exercises to modify your own financial plan, use the information to spark a deeper discussion with your advisor, or contact a RLP through the website. (Note: All the tools are free, your information will remain private unless you choose to share it, and there is no requirement for you to contact a planner.)
It starts with a series of three open-ended, thought-provoking questions to explore what an ideal, inspired life would include and then goes into exercises designed to help you focus and prioritize. Questions include: "Imagine you are financially secure. How would you live your life? Would you change anything? What would you do?" and "You have one day to live. Reflecting on your life, on all your accomplishments as well as on all the things that will remain undone, ask yourself: What did I miss? Who did I not get to be? What did I not get to do?"
I know -- deep, right? It's a far cry from the standard "Tell me what your goals are" queries that elicit vague, boilerplate answers. But isn't it worth it if it gets you that much closer to a plan that sparks joy and helps deliver the life you really want to lead?