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What I
find most rewarding about my job as a financial planner is the opportunity to
take numbers on a piece of paper and make them meaningful to my clients'
lives. Too often I see people whose life focus is on making money
rather than using money to make a life. Unfortunately, the
traditional financial planning model can emphasize working with the numbers
without focusing on life planning issues.
One example of this failure is best illustrated by the story of one of my
clients. I met him in 1983. At the time, he had worked 36 years at
Ladish Company where he operated a drop
forge. He planned on working until he maxed out his pension with
40 years of service. He was miserly in his approach to spending
and had accumulated over $600,000 in retirement accounts, a union pension and
a paid off mortgage on his South Milwaukee home.
In spite of disliking his job, he was committed to collecting the maximum
available pension. He tolerated his plight by self-medicating with
alcohol and obsessing over the size of the numbers on his financial
statements - he was truly money focused. He was single and lived a
solitary existence. I tried to convince him that he could easily
retire before age 62 and do something he really enjoyed. However, I did not
ask him what would prove to be some of the really important life
questions. He would worry about those things in life that he
wanted when he retired. These included buying a Cadillac (which he always
wanted), taking a trip on a plane (which he never did) and spending time with
his nieces (he never had children of his own and had limited family
interaction).
My client suffered a stroke 30 days after retiring at age 63 and died three
weeks later. For him his financial plan was over. What
did his money do for him? We had followed a money-centric
financial planning model but what was missing? I now believe it
was a meaningful discussion on his life goals and principles and assisting
him in formulating a plan to merge his money into his life.
A recent trend in the financial planning community that focuses on addressing
life issues has been the development of financial life
planning. This approach blends a person's life with their
money. This is accomplished by including in the financial planning
dialog family history, life transitions, life goals and life
principles.
Family history is defined as our life stories up to now. We all
have a story that includes a cast of characters called family members and
numerous plots that become our commentary on who we
are and where we came from. Life transitions are the changes we
experience as we live. These can include marriage, birth of a
child, career change, loss of a spouse, or retirement. It is
during these stress-filled times that having a coach, advisor and partner involved
in the process is invaluable. Our vision can be clouded by the
pressure to make the right decision creating a fertile environment for making
less than optimal decisions.
Life goals are those things we would like to accomplish during our life that
are in alignment with our purpose and principles. These include personal,
career, family and financial - both now and in the future.
Life principles are the moral and ethical compass that we use for guidance
and direction through our journey of change. It is these
principles that need to be considered when we develop action plans to achieve
our life goals.
Financial planners who provide this service have continuing education
training from one of three programs offering professional
training. I am most familiar with the Financial Life Planning
Institute. They offer a systematic approach for advisors who wish
to provide this level of financial planning to their
clients. Their web site is www.flpinc.com. For more information on life
planning in general, go to www.mygoals.com.
Michael Haubrich, CFP, is president of Financial
Service Group, Inc., a registered investment advisory firm in Racine,
WI. Website address www.toyourwealth.com.
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