Defining TRUE financial planning

During April I’ve conducted a couple of days of Coffee Cup Coaching sessions for some of the team at Chevron here in Perth. Interestingly some of the feedback has been that it was good to have gained an insight into financial planning. (Quite a few had not seen a financial adviser of any sort before.)

Why did I write “of any sort” above? Well, because there are no restrictions on who can call themselves a financial adviser.

And the sheer breadth of what could come under the banner of “financial advice” creates a lot of confusion. The sad consequence of the confusion is that in my experience most people have a very incomplete picture, which leads them to avoid seeking financial planning advice.

True Financial Planning

I wish I could tell you that there was a definition of financial planning that the entire industry, regulators and government agreed upon. Sadly that level of consensus is something I can only dream about in my lifetime.

So I am going to share with you my vision of true financial planning that I strive towards when working 1-on-1 with people.

My definition

To me true financial planning is about maximising the likelihood that you have the financial resources to always live the life you’d love, now and in the future.

In shorthand I think of this as financial fulfilment.

It’s much more than just investment advice

Every day you make many decisions that involve or impact upon your money, that impact upon your financial resources.

The lifestyle you lead is the cumulative impact of the daily decisions you make in managing your money (and other things). The breadth of the possible lifestyle outcomes over time is illustrated below.

Financial Outcomes Over Time

Some of those possible outcomes may fall within your vision of “living the life you’d love, and loving the life you’re living”. Many outcomes probably don’t.

Managing Money with Purpose = Financial Planning

Remove all the preconceptions from what you’ve heard or experienced and zoom up to a bigger picture. Financial planning is simply managing your money with purpose.

The purpose being to achieve the life outcome where you have the money to be, do and have what is really important to you.

Viewed at that higher level managing your money with purpose and achieving your desired outcome is something you could do yourself. (If you spent the time to acquire the knowledge and expertise.)

A qualified financial planner’s role is to help you achieve your desired life outcome quicker, easier and more enjoyably than if you do it yourself.

True financial planning in practice

In practice true financial planning is a dynamic, ongoing process just like your life is. The key conceptual elements are illustrated below.

Financial Planning Process

It seems obvious to start with your goals. My experience has been that many people can’t clearly articulate these, and have difficulty prioritising them. In that case you go back (or deeper) one step to uncover your values, to understand what is really important to you.

Your life experience influences your values and they shape your tangible goals. Your goals filter in the appropriate strategies, which in turn illuminate the every day tactical actions you need to take to get the lifestyle outcome you want.

That is why there is no cookie cutter, no one size fits all. And it is also why you should not automatically do what your mates or colleagues are doing. They’re not you – you are unique.

The value of true financial planning advice

When you consider that true financial planning is about maximising the likelihood you will be able to always live the life you’d love the value is immeasurably large. And the biggest benefits are the intangible peace of mind and comfort.

Conversely, the cost of not doing it can be immeasurably large on the downside. (Know anyone who is a miserable soul because they “can’t afford…”?)

You can read more detail about the value of financial advice here.

How to have the money for what’s important to you

If you’re not living the life you’d love and part of the reason has to do with money then a true financial planner can help. Similarly if you are not confident that you’ll have the money in the future to live your desired life.

And if you’re not clear on what you want or what is most important to you then a really good financial planner can coach you through uncovering those things. That will be the first part of their process of working with you.

If you like the sound of true financial planning that I described above then call me because that is what I do.