Thursday, March 24, 2011

Strategic Planning for NAPFA Part II: The Future of Personal Financial Planning & NAPFA

Strategic Planning for NAPFA Part II:
The Future of Personal Financial Planning & NAPFA

Why Personal Financial Life Planning Exists:

• The healing of personal financial anxiety putting money in its place to transcend to one’s significance
• Client realizable comprehensive goal determination coordinated and aligned with orderly plans for the achievement of desired life (and afterlife) goals

Why NAPFA Exists:

• Professional Development: Qualified comprehensive fee only membership professional training and development in ‘managing goals under management’ for clients’ (which requires a planner to do their own business plan, personal financial plan, and personal financial life plan – and the cobbler’s kid having no shoes is no damn excuse)
PROTECTION: Legislative Advocacy: Lobbying for the alignment of personal financial life planners’ and clients’ interests to be matched rather than in conflict with timely and full transparency
CONNECTION: Assembling comprehensive fee only personal financial life planners into a critical mass of financial purchasing power for disintermediation (allowing product providers to created lower cost products for clients)

Half truth; whole lie
Talmud (what NAPFA has become)

NAPFA has become:

• A trade organization for the marketing of member’s services
• A bloated bureaucracy dependent more and more of product providers for revenues (like the old IAFP) to feed itself – even putting a wire house official on the planning committee
• Officers more concerned with photo opportunities in the media for their own practice development

NAPFA has lost:

• Its differentiation –
o in part to the good job it has done relative to fiduciary standards
o allowing AUM (assets under management) compensation to be classified as fee only planning (1) which makes the fee only planner really asset managers in fee only planner’s clothing blurring distinction and contrary to being on the client’s best interests.
• It’s gumption and leadership
o Failing to enforce professional standards of its leadership and members (sitting on conflicting financial planning boards)
o No professional public rebukes for outright membership plagiarism,
o Past indifference to the planner training in the past by the College for Financial Planning and its alleged product liability.
Hypocrisy: The ship’s captain lectures on navigation as the ship sinks

What The Personal Financial ‘Life’ Planning Market (Particulary The 90 Million Boomers Wants/Needs/Desires:

• Anxiety relief from the fear of ‘outliving their money’
• Meaning IN their life (presented as ‘making a difference, what next? meaning, ‘still cutting the mustard’

The NAPFA business (yes, business given the lack of professional integrity enforcement and the Monte Hall Let’s Make A Deal for Vendors trade organization orientation) needs to refocus on comprehensive personal financial life planning in the continuing training and development of planners to meet these needs.
As Gandhi said, ‘be your message.’ And Franklin said, ‘better done than said.’ Well, how many damn fee only planners talk, wink at life planning – but haven’t done it themselves, let alone have a business plan nor their own personal financial plan in writing. (The answer, ‘it’s in my head,’ doesn’t count for clients and it sure as hell don’t count for planners. ‘It’s in my head,” is a head case – not ‘being one’s message’ no matter how one massages it with spin)
And faux yakety yak kumbaya life touchie feeling life planning (a paid friend) with no results other than to defend one’s asset under management percentage fee with this feature that doesn’t deliver – doesn’t count either as personal financial life planning.

Without getting into the weeds too far – action is required – moving toward not just understanding. When Indiana Jones faced a chasm to get to the Holy Grail – and there was no, he took the leap of faith and made a first step and the bridge appeared. Well, the first step in life after enough comprehensive personal financial life planning is often a small one. For example, have the client take out his or her calendar and ask him or her to X out a regular afternoon date for 4 hours for the next 3 months (otherwise, their life planning transition will be the leftovers – and you know where leftovers eventually go usually in the trash). That afternoon 1 day a week, 4 hours a week, is to try all those someday things they have put off and wanted to do. But here is the kicker, they need permission to NOT be great at whatever it is.

One step: – no tom toms, self esteem, abandonment or my mother or father’s fault – one step – moving toward, climbing the mountain rather than mining the mountain.

In conjunction with monetizing the fear of outliving one’s money – the personal financial life planner needs to assist at getting to the heart of the matter: what next – finding meaning IN one’s life, making a difference and still cutting the mustard.

To recreate NAPFA, the above differentiations will require a different NAPFA, even cannibalization of itself, and more importantly disgorgement of assets to the regions, and a new revenue sharing arrangement ala states rights and federalism.

• Forget withering, structure follows mission. Zero base budget NAPFA to its above new limited role, give it two times its operating costs and disgorge the rest to the regions on a per member basis.
• Thereafter, the dues split should be 80% to the regions with NAPFA National keeping 20%. The whole emphasis of the regions is professional development and study groups.

People forget in their revisionist self serving history of NAPFA, it was SIFA that created NAPFA. Period – end of sentence. SIFA has, in Russian terms, been De-Stalinized.

At SIFA there was a structure to our meetings – study groups.
• Each member had to have a specialty to share with the group. This allowed more time for each planner to focus on process and less on content. Thus, each member’s time was ‘leveraged.’
• The meetings were a round robin – going through each area sequentially
1. Practice management ideas
2. Process ideas and techniques
3. Strategies and tactics
4. Content area discussion
5. Deals
6. Marketing ideas
7. Presentations
8. Richard Lee’s current squeeze
• We created a federation – a consortium amongst ourselves as such that if something could have happened to one another – there was someone ‘on call’ if necessary

As far as conventions are concerned (go to meeting doc com is probably preferable to belly bumping) NAPFA National is on its own. It’s a profit center that stands on its own.

Half truth; whole lies

NAPFA’s differentiation is gone – but the need – the thirst for meaning IN one’s life and reducing the fear of outliving one’s resources (notice not just money) is greater than ever. Reinventing NAPFA isn’t just necessary it’s a matter of survival and incremental change and pouring new whine (on purpose) into old sheaths (present structure) is being DOS in a a Windows 7 world.
Dithering, dawdling, more committee meetings, self congratulatory insulated back slapping won’t cut it.

Above the crowd or just faceless in the crowd – that’s the decision

(1) Assets Under Management is contrary – the antithesis of fee only comprehensive financial life planning putting the client and the planner in conflict. As Maslow said, if all we know is a hammer everything will look like a nail. Unconsciously or unconsciously, assets under management compensation gravitates the focus of the planner to ‘more’ even when a lower rate of return with less risk would make the goal. Other goals – providing for long term care, income adequacy upon disability etc – become second class citizens in the practice. Fee only comprehensive personal financial life planning is about managing goals NOT managing assets. AUM is just a Trojan horse using personal financial planning as a vehicle to be an investment manager in personal financial planner’s clothing. If NAPFA membership is to be continued for AUM compensated planners, these planners should have a different NAPFA membership designation and no vote in elections.

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