Tuesday, October 28, 2014

PC (Political Correctness) Personal Financial Planning

Renaming: PC (Political Correctness) Personal Financial Planning

It depends on what the definition of is, is.
Bill Clinton

            Recently a personal financial planning commentator titled an essay ‘financial independence in lieu of retirement (and other phrases) that should be banished from retirement planning.’
            And while I agree that the emphasis on the success probability percentage in meeting one’s personal financial goals (in this particular instance financial independence/retirement) creates, by implication, an inverse failure rate, which scares the be Jesus (or if Jewish – the be Moses) out of clients.  (In addition, the ‘failure rate’ overshadows and ignores the probability of excess with fear).  The aforementioned said, I agree, in the context of the goal, the probability of adjustment of the goal (and the ability to adapt the standard of living style from passive resources) should also be examined and is generally overlooked.
My concern is benign spun personal financial planning pc corn-pone becomes a slippery slope of renaming: is becomes ‘it depends on what the definition of is, is’ (or worse ‘red lines’ become fading ‘chartreuse’ and or 4 Pinocchio’s (you can keep your doctor) to hide, minimize, and or rationalize failure (‘non-traditional success’ in PC terms). When reframing/renaming makes is into is not and is not into is – you get pablum snot and sanitizing poppycock like ‘it is what it is.’
 Reframing (silver lining snot) can easily become linguistic cover for failure, shortfalls, and the unspoken liquidation of assets to meet the cash flow requirements. (Planners love to speak of return on capital but shy away from the return of capital required – the liquidation – required to meet the cash flow requirements of a goal – preferring words like funding – rather than recognizing the goal as a liability to be funded and possibly liquidated (which means the client’s net worth (net worthiness???) may decline. Funding is preferable to the precise naming of distribution to meet the goal above and beyond rate of return as in fact ‘annuitization.’ (Annuitization is just not an instrument of insurance companies but in fact whether well done, conscious or unconscious what is done to fund a goal that requires distribution of the underlying capital – return of capital – for the ‘cash flow’ required. Instead of the doctor saying ‘this is going to hurt,’ we now hear ‘this may be a little uncomfortable’ even though it hurts like hell. And a personal note: short becomes vertically challenged (or my preference ‘compact).
So when ‘retirement/financial independence’ income is insufficient, planners suggest renaming retirement/financial independence cash flows (which in part masks the return of capital and conscious, unconscious and or half assed annuitization).
And yet I’ll stipulate that retirement cash flows, when distribution of capital is required, is more accurate but dissipation that may be necessary is personal financial planning PC’d away like the doctor telling you a procedure ‘may be a little uncomfortable’ even though it hurts like hell or being called ‘vertically challenged’ rather than short. (I, myself, prefer ‘compact’ at 5’5” on a good day).
Metaphorically, renaming, at the PC personal financial planning extremes, changes ugly into ‘under attractive’ when a two bagger is more accurate. And in personal financial planning, personal financial planning PC reframing becomes ‘don’t you miss going to work and the camaraderie or it’s not retirement but rewirement.’
The truth is a personal financial planning goal is in reality a liability to be matched by appropriate assets for funding – and the distributions are a variable annuity which we try to fix. We just hate having ‘less’ as ‘our worthiness’ in part – regardless of protestations to the opposite – to our ‘net worth.’
Less net worth – less worthy?
Thus the delusional pursuit of More and the fear of outliving our assets which also gets to a more primal discussion of what is underneath the goal.

Half truth; whole lies

Instead of parsing, reframing, renaming ‘the appellation of the goal/objective’ more useful would be to define and name the objective by payoff rather than the renaming, spinning, sanitizing , euphemizing and Lanny Davising the objective to cover shortfalls, failures, and the need, if applicable, for dissipation.
For example, really what are the desired rewards/payoffs of the name: estate planning? Typically, the payoffs are:
·         #1 Income adequacy for spouse, insignificant other etc
·         #2 Asset disposition according to desires
·         Reduction of taxes to allow the above in #1 and #2
·         Sufficient liquidity to avoid shrinkage in #1 and #2

As far as ‘financial independence’ (as in sufficient income/cash flow from passive sources to meet the desire level without active earnings) digging deeper to the why – the actual payoff may be (and should be recognized as such):

·         Becoming independent of one’s independent business
·         Healing personal financial anxiety (lowering Xanax™ dosage)
·         Not being dependent (eloquently stated as ‘not having to take crap’ or ‘having to kiss tuchass’  by several former clients when I was in practice
·         And My Favorite which is very real but politically incorrect:...wait for it….wait for it….FUability© (to those offended see the prior bullet point).

So yes, there should be an addition of probability of adjustment (actually adaptability quotient) as well as probability of failure and excess but renaming financial independence misses the point. Rather than renaming the objective, parsing or reframing it – better to get at the underlying payoff.
And that’s my SHTUP-U-ability© response.(1)

(1) The original definition of ENOUGH (1977: clientele realizable goal determination coordinated with orderly plans for their desired payoffs. Today, I define ENOUGH as: healing personal financial anxiety, puttin’ money in its place to connect to transcend to one’s signification.

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