Life planning is a process of clarifying your values, goals, and priorities and developing a plan to achieve them. It is a way of taking charge of your life and making sure that you are living it in a way that is meaningful and fulfilling to you. Life planning isn't necessarily about having everything figured out or planning out every detail of your life. It is about being intentional about what your clients want to achieve and how they want to live. It is about having a roadmap to guide them on their journey.
If you can understand your client's fears and motivations around money, you'll be well-positioned to be a more trusted and valuable thought partner along their journey. Together, you all can align the financial and emotional incentives that increase the probability of achieving their goals.
A great value-add for client relationships
In the five years of running my RIA, my experience is that there are many benefits of life planning, particularly for the client-advisor relationship. For many people, having a life plan can provide an increased sense of purpose and motivation. It's simple. When you know what you are working towards, it is easier to stay focused and motivated. Financial life planning is no different. It helps you and your clients clarify what is important to them and what they want to achieve in life. Here's a hint: it has little to do with more money or better returns.
It sounds cliche, but life planning can provide a sense of direction and focus and help everyone involved to make better decisions. To that point, when clients have a clear understanding of their values and goals, it is easier to make decisions that are in line with them. From my experience, it also reduces the stress and anxiety that is common with managing personal finances. As advisors, this enables us to help clients avoid making decisions that they will later regret and give them more control over their lives. And when done correctly, life planning will allow your clients to live a life that is aligned with their values and goals. This ultimately leads to our clients feeling fulfilled and helps create a life they love.
George Kinder, a pioneer in the field of financial life planning, developed three questions that are often used to help clients explore their life goals and values, and to align their financial decisions with what truly matters to them. These questions are designed to go beyond the typical financial planning discussions and delve into the deeper aspects of an individual's life and aspirations. The first question is, "Imagine you are financially secure, that you have enough money to take care of your needs now and in the future. How would you live your life? What would you do with your money?" This question encourages clients to think about their financial situation without any constraints. It helps them envision their ideal life and how they would use their wealth to achieve their goals and live a fulfilling life. The second question gets a little deeper: Now, let's say you visit your doctor, and the doctor shocks you with the news that you have only five to ten years left to live. You won't ever feel sick, but you will have no notice of the moment of your death. What will you do in the time you have remaining?" This question leads clients to consider how they would live their lives if they had a limited amount of time left. It encourages them to reflect on their deepest desires and what truly matters to them in a more urgent context. It almost always prompts a response that has something to do with experiences with family and loved ones. The last question: "This time, your doctor shocks you with the news that you have only 24 hours to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What did you miss? Who did you not get to be? What did you not get to do?" This is my favorite question because it is even more introspective and encourages clients to reflect on their regrets and unfulfilled dreams. It helps them identify what they value most and what they wish they had done differently in their lives. These questions are powerful tools for financial planners and advisors to engage clients in meaningful discussions about their life goals and values. And frankly, although most clients have yet to give immediate answers, it helps them gain clarity about their priorities and can guide the creation of a financial plan that aligns with their more profound aspirations.
Implementing life planning in your practice
In my opinion, if you're doing financial planning and don't feel like a therapist, you're doing it wrong. My colleague, Meg Bartelt, founder of Flow Financial Planning, said it best: "life planning isn't a particular set of meetings, exercises, or questions. It doesn't and shouldn't have a particular label slapped on it. At its foundation is genuine listening and empathy." As technology plays a more significant role in our businesses, advisors must prioritize this human-centered approach to foster genuine relationships and facilitate meaningful conversations.
Try asking questions like the following:
What do you think will bring meaning and purpose to your financial life?
What would you like to accomplish or experience so that, in the end, you will feel you have lived your life fully?
What would you do if you had more time and money?
If your experience is similar to mine, you will be surprised how trusting and transparent your clients will be when they feel heard. What has been even more impactful is empowering and motivating our clients to do the "hard things." Let's look at estate planning as an example. It's nuanced, has many moving pieces, and involves difficult conversations with family — a perfect recipe for procrastination. That's why many advisors struggle with getting their clients to take action. In my practice, estate planning was a pain point that was challenging to solve for our clients. Since most of the families we are working with are at the height of experiencing a liquidity event, equity, taxes, cash flow, and even emotional well-being are bumped up to the top of the priority list — and rightfully so. After experiencing a personal life-changing event, I prioritized estate planning for our clients. We educated them on the benefits of having an estate plan and created workflows and processes to implement estate planning into our financial planning process. Of course, this moved the needle in ensuring our clients are taking action and not procrastinating. But it was the relationship we had established prior that was the true differentiator.
At the end of the day, money is only a piece of paper. It's simply a means to an end. What's more important than money is helping our clients figure out what brings them true fulfillment, and that goes beyond the stock market, software, and Monte Carlo simulations. Invest in really getting to know your clients, and it will pay dividends for years to come.
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