How To Create A Financial Plan With Intention

The most discouraging statistic in all financial planning is that up to 80% of financial planning recommendations go unimplemented. That’s correct: investors are spending valuable money and invaluable time to seek and receive recommendations, only to leave most of them behind. 

There are many reasons for this enormous failure in the financial industry. However, the central dilemma is a lack of connection between what investors seek and what advisors deliver. Although investors get plenty of instructions and know what they are supposed to do, that does not mean they will do it; not understanding the “why” or ever having one provided is almost certainly not going to resonate with anyone. 

There may be a course of action, but if, as an investor, you don’t understand the intention, then it will be hard to stay on the course. How can we flip the script and spin this statistic around so that at least 80% of the recommendations are beneficially implemented? 

This article discusses the following:

  •  Start with discovery, not dollars
  •  Goals should be bespoke, not borrowed or boilerplate
  •  Accomplish more by expecting less
  • Empower your planning with accountability

1. Start With Discovery, Not Dollars

The Certified Financial Planner (CFP®) Board process doesn’t begin with collecting and calculating numbers and figures but with values and attitudes. It’s qualitative and subjective that precedes the quantitative and objective. Before knowing what you own, an advisor needs to know who you are.

But despite the directive, the CFP® Board has left much of the education regarding qualitative discovery to a host of planning niches and thought leaders. That’s why TFA created the Intentional Planning System, with life planning at the core of financial planning. Our Greensboro-based advisors begin the planning process with personal discovery before financial discovery. 

We want to know what’s most important to you in life. This helps us ensure that your financial planning recommendations support your priorities. We begin with intention, deliberately, to increase the probability of beneficial action.

2. Goals Should Be Bespoke, Not Borrowed or Boilerplate

Financial planning is much more efficient for financial advisors when it’s mostly boilerplate, but your goals should be bespoke, not borrowed. Recommendations should feature your vernacular whenever possible, not industry jargon. You shouldn’t have the same recommendations as your neighbor.

Customized goals fueled with the intention uncovered in discovery may require more deliberation, for both investors and their advisors. Nevertheless, they are more likely to be acted on than an impersonal copy-and-paste plan.

3. Accomplish More by Expecting Less

One of the greatest challenges in financial planning is limiting its scope. At the very least, comprehensive financial planning includes a review of one’s cash flow, assets, liabilities, investments, retirement and benefit plans, insurance policies, and estate planning documents. 

A comprehensive analysis is vitally important because each of the above elements is inextricably intertwined with the others. The temptation, therefore, is to deliver a comprehensive slate of recommendations following a comprehensive analysis. 

However, we’ve learned from an unruly to-do list (supported by evidence from the field of behavioral finance) that analysis paralysis is a very real phenomenon. So, it’s absolutely true that we can accomplish more by setting out to achieve less.

The solution is disciplined, if not ruthless, prioritization. This is a perpetual and collaborative process between investors and their advisors. It requires reconciling aspiration and reality into an achievable and ever-evolving slate of expectations.

We use a simple tool at TFA called the One-Year Plan, which brings the value to be gained from long-term financial planning into the short-term. 

This is why we try to limit the primary objectives for each of our clients annually to the accessible number of three: transforming your intention into a defined list of practical next actions, each of which is assigned to responsible parties with explicit timelines. This simple method helps ensure that to-dos become to-done.

4. Empower Your Planning With Accountability

After you leave your financial planner’s office or virtual meeting room, the rest of life comes crashing in, doesn’t it? The demands on your time are so many that an accountability partner becomes important, if not imperative.

A recently-updated study by Vanguard concludes that the value of an advisor is up to, if not exceeding, 3% of the value of assets being managed—per year. They conclude that the majority of these excess returns are attributed to “behavioral coaching,” or accountability.

And because personal finance is more personal than it is finance, even financial planners need financial planners. We are all prone to outsmarting ourselves and willful ignorance when it comes to managing our money, so having a coach or guide can make all the difference.

5. Course Correction

How To Create A Financial Plan triadfa.com
Insurer protecting a cargo ship with his hands

Ralph Waldo Emerson said life is about the journey, not the destination, but it feels like this mentality doesn’t apply in financial planning; that the only thing that matters is the destination. Morgan Housel, author of the book The Psychology of Money, refers to the strong pull of external measures, especially in matters of money:

[T]here’s a strong social pull toward external measures – chasing a path someone else set, whether you enjoy it or not. Social media makes it ten times more powerful. But I also know there’s a strong natural desire for internal measures – being independent, following your quirky habits, and doing what you want, when you want, with whom you want. That’s what people actually want.

This is a challenging, but helpful, reminder. The number of variables in financial planning is vast. So vast that insistence on a concrete destination for a prescribed external measure often leads to frustration (which increases the probability of failure).

We’re tempted to believe that financial planning is like a linear journey from Point A to Point B, but it is much more like sailing. Sometimes the wind is at our backs, propelling us toward an objective, perhaps even faster than we had anticipated. 

But other times—much of the time—the wind is at an unfavorable angle, requiring course corrections. And sometimes, the wind is nonexistent and all we can do is wait.

It is our privilege to act as guides for more than 700 individuals and families in the Greensboro area. That’s why we provide a bespoke client experience grounded in your personal priorities. 
We help you pursue a planning process that adds demonstrable value, both today and into the future. As Greensboro certified financial planners, we specialize in intentional retirement, asset management, and more. Contact us to learn more.

eBook: What Can Intentional Investing Do For Me?

More about the author: Tim Maurer

Tim Maurer, CFP®, RLP® is Head of Wealth Management for Triad Financial Advisors. A graduate of Towson University, Tim taught financial planning at his alma mater for seven years. He is a CNBC contributor and also writes for Forbes.

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