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).
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.