The Telegraph published an interesting article this weekend, asking whether a new breed of Financial Life Planners provide a valuable service or represent a waste of money.
Financial Life Planning is a service that originated in the United States, now practised by a handful of financial advisers in the UK.
It aims to transform relationships with money by helping people more deeply understand their life goals. This can only be a good thing.
Financial Life Planning uses a variety of different methods, including the one taught by George Kinder of the Kinder Institute which trains financial advisers to ask a series of questions.
These questions might include, “If you had more time or money, what would you do?” and “What do you want to accomplish or attain so you will feel that you’ve had a life well-lived?”
The Kinder method then focuses on three core questions, designed to uncover deeper values and goals in life:
1 – 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? Would you change anything?
2 – Now imagine that you visit your doctor, who tells you that you have only 5-10 years 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? Will you change your life and how will you do it? (Note that this question does not assume unlimited funds.)
3 – Finally, imagine that your doctor shocks you with the news that you only have 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?
People often find it relatively easy to answer the first question, with the second and third questions becoming progressively harder to answer.
All competent Financial Planners should be incorporating elements of Financial Life Planning into their work with clients.
Rather than Financial Life Planning being Financial Planning done properly (as we have sometimes heard it described), Financial Planning done properly should incorporate some of the skills from Financial Life Planning.
Our experience of seeing a variety of Financial Life Planning propositions demonstrated is that it often fails to translate well from US to UK culture.
We often see Financial Life Planning closely linked to the more spiritual side of things, with a sometimes uncomfortable inclusion of religious and emotional issues. There are things that we accept our clients will feel uncomfortable discussing with their Financial Planner.
If a service like Financial Life Planning does appeal, it is important to make sure it incorporates traditional Financial Planning, to ensure you get value for money.
You should make sure that your Financial Life Planner is a well qualified and experienced Financial Planner, holding the Certified Financial Planner (CFP) and/or Chartered Financial Planner status as a minimum.
There is a risk that some poorly qualified IFAs are using a short residential course in Financial Life Planning to give the impression that they are highly qualified in respect of the important technical aspects of financial planning and financial advice.
What really matters is that you feel sufficiently comfortable with your Financial Planner to discuss important issues and share the relevant aspects of your life aspirations, in order to give them the details they need to create a robust Financial Plan.
This comfort comes from doing your research before engaging with a Financial Planner, meeting with a prospective Financial Planner to understand their approach and providing all of the relevant information they need about your life, goals and objectives.
Photo credit: Flickr/domestictimes
