The Convenient
Deception of ‘Born Again’ Goals Personal Financial Planning?
Look at the monkey
Saying To Deflection
for Sleight of Hand
*******
(Below is a
response to a deservedly well regarded personal financial planning writer (especially in the content areas of personal financial) questioning the
motivation of the born again personal financial planners suddenly adopting
managing goals (goal oriented personal financial planning) rather than managing
& gathering assets (per their historical habit) in the name of personal
financial planning. Why? To maintain asset under management margins in a
demographically driven lower rate of return environment over the next decade
(unless fracking and 3D printing overcome the demographic tsunami of asset
withdrawal from capital markets in the US).
Boychik:
Stipulating that,
in theory, though rarely or at least obviously not in widespread practice,
personal financial planning is:
1- A process
2- Clientle
realizable goal determination, coordinated with the orderly plans for their
desired payoffs & achievement
3- And recognizing
adjustments and mid course corrections in this process
Then the critical
factor is the word realizable - and dealing in process with the alternatives
and tradeoffs. Or as Thomas Sowell once stated “there are no solutions only tradeoffs”
In
reality rather than reinventing history, personal financial planning was born as
a delivery system for the sale of product. However, ideally, personal financial
planning was to be was a process towards #2.. (With AUM ((ass-ets under management)) personal financial planning, the emphasis
has become personal financial planning as a delivery system – for asset gathering – managing assets rather than
managing goals. And a consequence of this compensation method for managing
assets (which has an inherent conflict of interest with managing goals), as Maslow
said, if all you know is a hammer everything looks like a nail. Result of asset
gathering/asset under management – is the predominant weight given to CONTENT
consulting rather than PROCESS consulting.
Boychik,
even Living Planning by Connecticut General in the ‘70’s - before your time -
did goal planning - Objectives & Liabilities offset by Assets. Oakland
Finanncial (fee only) took the same approach stressing process – managing
assets (though CG’s process seem just serendipitously to just happen to come up
with a need for additional life insurance).
Goal
planning and realization is the essence of personal financial planning and the
coordination of man/woman at work and assets at work towards goals.
But possibilities
(as you are suggesting) do not become before goals. If anything, the planner
should take the client’s initial ‘goals’ however unrealistic - quantify, prioritize -
and show the consequences of “as is”- as the starting point - rather than
coming from Maslow's hammer & ‘more, more, more’ (which will nail the planner)
Having
practiced MBO (management by objectives) and corporate strategic planning (just
larger assets similar processes) as well as personal financial planning -
possibilities are tuchass backwards to the goal. (Strategic analysis i.e. SWOT ((strength,
weakness, opportunity, and threat scrutiny)) and yes mission and vision come
second along with ground rules and criteria etc - to hone thereafter into goals
and priorities and tradeoffs). But first is the baseline as is – not starting with possibilities.
Superimposing possibilities first
- becomes a presupposition and bias of the planner.
What I
find really interesting as we approach lower overall rates of return (where 1%
asset under management is 16.7%-12.5% of an 6-8% return versus 1% on a 12% is
8.3%) is the Born Again Coming to Moses/Jesus Movement back to goal planning
emphasis. And it is my opinion, the probability of this Born Again Goal
Planning Personal Financial Planning has nothing to do with seeing the light
but for keeping AUM margins and obfuscate the lower AUM cost benefit. Had
AUM never been the compensation to begin with (with its inherent proclivity
towards more, more, more) the question would not be MORE possibilities
relatively or absolutely by what is ENOUGH etc to make the goal...
So
going to goal planning now - is no different than a look at the monkey
deflection – sleight of personal financial planning hand
Again the essence of planning - which is first and foremost a process -was
clientle realizable goal determination, coordinated with orderly plans for the
desired payoffs and achievement (notice the word payoff) - and what AUM and
commission, fee and commission planning is - an inherent conflict of interest
to this process with the emphasis on asset gathering and or commissions and
becomes a delivery method for the sale of CONTENT.
A famous Judaic story:
Rabbi
Hillel when asked to explain Judaism while standing on one foot said to
paraphrase, 'don't do unto others which is unpleasant to yourself. The rest is
commentary. Go study.'
Boychik,
ENOUGH has evolved from clientele realizable goal determination coordinated
with orderly plans for the desired payoffs and achievement(c) to - healing
personal financial anxiety, puttin' money in its place, to connect to transcend
to one's significance.
The
rest is commentary. Go study.
