Morningstar Magazine - February/March 2017 - 21


2 You Are More Than a Financial Plan

I can't emphasize this one enough. By presenting
our services as a product (the financial plan),
we train clients to see us as nothing more than
a salesperson. We are so much more than
that! We are experienced professionals who can
help clients deal with many of the emotional
decisions they need to make around money.
A binder or even an algorithm can't help your
client avoid the classic mistake of buying high
or selling low. You can.

3 Financial Plans Assume People Behave

The Financial Plan
Is Dead Long live
financial planning.
BEHAVIOR GAP

Carl Richards

Tell me if this story sounds familiar.
You've signed a new client, you've asked them
the right questions, and you feel like you
have a handle on the financial details. You take
that information, and you build a beautiful
financial plan that fills a two-inch binder perfectly.
It's amazing!
But guess what? We only know one thing
for sure about this plan: It's wrong. We just don't
know how or by how much.
Don't get me wrong. We need to create
a starting point for our clients. But instead
of telling clients they need to know
exactly what they'll spend on their utilities

20 years from now, we need to help them embrace
the idea of guessing. Things will change,
but with every decision we make, we'll be a little
less wrong.
This reality means we need to draw a clear line for
our clients between the plan as a product
and the process of planning as a relationship.
Think about the implications. It changes almost
everything about your business.
Conversations, pricing models, ongoing client
interactions-things shift when it becomes
about the ongoing process of financial planning
and less about the financial plan. I know
it seems like a small difference, but here's why
it matters.
1 Life Isn't Static

It's so important to write things down, to
identify our clients' current reality and where they
want to go. But we need to stop pretending
that what we put on paper won't need to be
changed or updated in a year, let alone a decade
or two. Focusing solely on a financial plan
blinds us to the truth that clients need the process
of financial planning-identifying their values
and goals-more than a spreadsheet that shows
projected returns over 20 years.

I'm sure one of these days a client will walk
into your office and that person will never make
a mistake. But for the rest of your clients comes
a hard truth. Mistakes will happen. Emotions
will trip up even the smartest people. Adjustments
will need to be made. Now, please show me
in the financial plan you built where you predict
when and how a client will make a mistake.
Nothing there, right?
By embracing the process of financial planning,
we can lessen the anxiety around these mistakes.
Instead of fearing that one bad decision
ruins everything, clients understand that you'll
help them adapt. You're prepared to suggest
alternatives to help them get back on track.
In short, you're ready, willing, and able to help
them fix their mistakes. That's a powerful message
to share with clients.
Again, to be clear, I'm not saying you shouldn't
produce a financial plan. Far from it, in fact.
As I noted earlier, everyone benefits from putting
values and goals down on paper. But don't
get sucked into the idea that a thick plan equals
"value." Your value, the real reason people
benefit from working with you, goes beyond paper,
and it starts by embracing the ongoing process
of financial planning. Ready to get started? K
Carl Richards, CFP, is the author of The Behavior Gap
and The One-Page Financial Plan: A Simple Way
to Be Smart About Your Money. He also writes the weekly
Sketch Guy column for The New York Times.

global.morningstar.com/Morningstarmagazine

21


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Table of Contents for the Digital Edition of Morningstar Magazine - February/March 2017

Contents
Morningstar Magazine - February/March 2017 - Cover1
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