The Financial Planning Process Matters

February 28, 2019 5 Minute Read

March is my favorite month and not just because it is my birthday month but because it is the first sign of spring (it is officially here March 20th).  The days are getting a bit longer and the weather a bit warmer. It is also a good time to take a moment and reflect on the year thus far and what may come as the year progresses.  In past newsletters, we’ve talked about goals and some of the resources that might help you achieve them.  We had a gut-wrenching market both in bonds and stocks that rebounded faster than they fell moving straight up since the Christmas Eve low.  This gave us all an opportunity to reevaluate our thoughts about risk and possibly make corrections.  It has also given me cause to think about our process. 

As I reflect on 20 years in the business of helping people with their finances, I have noticed a few things.  One of which is the financial planning process matters.  You cannot make good financial decisions unless you know where you are.  Where you are starts with what are your assets, your liabilities, what income can you reasonably expect in the coming year and a projection of likely expenses.  Identifying those numbers are the bare essentials – you have to know those before you worry about the tax laws and the market ups and downs.  And yet, it can be surprisingly difficult for some of us, and I include myself, to confront these seemingly simple numbers.  The more I work with others to understand their finances and make good decisions, the more I realize the numbers are easy – it is the worry and the judgement we have of those numbers that makes it difficult.

When I started in this industry, I was trained in how to gather the important numbers, put them in the software and present the outcomes.  We followed the guidelines of the CFP Board’s Financial Planning Practice Standards on how to best follow this process to get consistent results, but I soon discovered that wasn’t enough.  Sure, people got the answers on how much to save, when they could retire and how much they could spend in retirement, but is that all?  Not by a long shot.  First of all, we have way more questions than just the ones above.  Second, we have emotion tied to all of it.  But probably the trickiest is we have beliefs about money that we picked up along the way from parents, friends, school, church, the community and others that have not been questioned.  So, running in the background of all the decision making about money are unconscious, unquestioned beliefs about money and finances. Beliefs like – it is good or bad, whether we deserve it, whether there is enough of it.  Enough of it.  That is a big one.  Many of us live in a belief that there isn’t enough to go around even when we have glimpses that it isn’t true. In the background, influencing our thinking, is the belief there isn’t enough.  We’ll talk more about these beliefs in coming episodes.  What I would like you to think about is the beliefs you have about money, one’s that we collectively acquired along the way, that we haven’t questioned in a long time.  Talk about these beliefs with your partner or a friend.  When you talk about them you have the opportunity to question them and, then, you can see if they still fit, if not, you can discard them and install new beliefs.  I’d love to hear your input on the above and if you feel like sharing please do so.  I’ll keep anything you share with me confidential.

The information provided is for guidance and informational purposes only.  The articles are not the opinions of ProCore Advisors, LLC.