Financial Planning Gets Personal

Just wondering what the financial planning community thinks about some of the concerns posed in this article:

Financial Planning Gets Personal

More financial advisers are moving beyond money matters and playing counselor with their clients. Not everyone thinks that's a good idea.

http://www.smartmoney.com/investing/stocks/financial-planning-gets-personal

Please "comment" here in this blog. Should consumers be wary if their financial planner takes a more personal approach? What types of "best practices" to you embrace?


Here are my thoughts:

While I appreciate the conclusion the article comes to, there are a number of points that need to be addressed. The first comes in the third paragraph where the author notes that critics suggest life planning “comes dangerously close to therapy”. I am unclear as to where the danger lies. Therapists play a vital and sacred role in our society. If we come close to their work without impinging on it, where is the danger?

For those who have been through appropriate life planning training, it is clear that life planners are not attempting in any way to cure phobias or diagnose psychoses. The process may be therapeutic, but it is in no way therapy. The article goes on to suggest that there is danger in the “awkward feeling that it's inappropriate and that sharing all those details effectively tangles the heartstrings with the purse strings”. I would suggest that the heartstrings in the purse strings are tangled before the client even gets through the door of our offices. What does all that soul-searching do for the client? Let's see if we can untangle the strings.

The article goes on to discuss the idea that empathy doesn't make more money for clients. They noted one client whose planner engaged in deeper conversations but their investments which had been the same for years went down in the market decline as much as anyone else's. I don't believe that life planning was never designed to increase investment returns but rather to change how we feel when they are less than optimal. I think the point is to decouple our happiness from stock market performance. If we have a life that is rich and full and that we consider really worth living, it should be that way regardless of how much is in our investment account.

Finally, it was suggested that “putting too many emotions on the table can cloud client's judgment” and that an adviser with access to a clients personal weaknesses leaves the client vulnerable. I guess we should come to expect this kind of response and a post Madoff world. All of the people I have met in my training and experience with life planning are of the highest caliber of ethics and professional standards. I can't imagine any of them taking advantage of a client’s vulnerability. If an adviser is in the business of taking advantage of clients vulnerability's, it seems difficult to imagine that they would go through two years of life planning training just do it.

- Chris Dowley

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