Journal of Financial Planning: August 2014
George Kinder, CFP®, RLP®, is the founder of the Kinder Institute of Life Planning and designer of trainings that are recognized world-wide as the standard for client-adviser relationship skills. He recently launched a consumer website, LifePlanningforYou.com, and co-authored Life Planning for You: How to Design & Deliver the Life of Your Dreams.
The brand of life planning that I teach is called EVOKE®, an acronym for a five-phase client-centered interview process. The five phases are Exploration, Vision, Obstacles, Knowledge, and Execution.
The Vision phase of an engagement has a moment we call “lighting the torch” where the client feels energized into entrepreneurial action. It is awe-inspiring to witness, and deeply meaningful to experience. Clients leave exhilarated. Bolstered by financial architecture, they become motivated to live the life they have always longed to live, to remedy difficult situations that have held them back for far too long, and to take actions that immediately bring significant breaths of freedom into their lives. We say that we deliver freedom—not products, not plans—but freedom. It’s what makes our work worthwhile and unique. As Guy Cumbie once said to me, “It’s financial planning done right.” It’s what keeps bringing the clients back, and referring their friends and families.
Entrepreneurial endeavor is inadequately understood, both in classic economic terms and in life planning. It’s the driver of economic and social value in a society. Its delivery is what gives financial planning its value to an adviser and to the consumer. The value lies in the best economic rewards, in lives best lived, and in the thrill and meaning experienced and exchanged in the engagement.
You might think it is security that delivers financial planning’s value, and it certainly has its place, but security (the financial architecture) is best applied last. How can you possibly know what financial work to do if you don’t know who your client is? Applying financial architecture first, as many planners attempt (even if unwittingly by interrupting a client’s goal narrative with financial detail or the planner’s own agenda), distracts clients—often permanently—from what they care about most.
Without engaging around life aspirations with the client in a measured process with much room for feelings and depth, without making life planning the centerpiece of their work, financial planners fail in their fiduciary duty to put clients first. They engage in misleading and incomplete analyses. They invest in the wrong products at the wrong time. They fail to win client trust and engagement. They lose client assets, the clients themselves, and countless guaranteed referrals. Their ladder is on the wall of money. That’s the wrong wall.
What Is Entrepreneurial Endeavor?
Entrepreneurship is commonly defined as the process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture. You can feel the energy in the definition. It’s that energy that is entrepreneurial endeavor. Take the word “business” out of the definition and you have the energy that brings change to every facet of society. That’s what life planning unleashes. That’s entrepreneurial endeavor.
In a life planner’s office, entrepreneurial endeavor from the client typically falls into one or all five categories. They are family, values (or spirit), creativity (which includes new business activity), community, and environment (or a sense of place).
What are some examples of entrepreneurial endeavor?
Holly Hunter (or, “the other Holly Hunter” as she describes herself) was a financial adviser who was fed up with the old-school, product-centered approach to financial services, and quit. Then she got life planned. Within moments it seemed she was creating a whole new financial planning business based on life planning, putting the client first. It’s where she had always wanted to be but didn’t know how. Within four years she built up such a strong business that she was able to shift dramatically to what was an even deeper, and for her a more inspiring, endeavor.
Hunter then bought land on the beach in Mexico and moved there with her husband. She’s created something inspiring—a thriving, working, off-the-grid, sustainability education center, campground and ranch, with a permaculture food forest, organic crops, farm stand, and roadside café. See it all at www.ranchosolymar.com.
I recently worked with a man whose primary passion and life plan is to spend significantly more time with his wife and family. Within days of our time together, he abandoned all evening and weekend work hours, delegated much of his work to others, and was taking Fridays off to be exclusively with his wife and family. His most serious mission was to adopt a child, and I suggested having that conversation soon with his wife, but he knew better. He knew the only way she would enthusiastically agree was if he demonstrated with sincerity and over significant time that he was indeed a great family man.
I was inspired recently by a Tweet from Tina Weeks, a leading life planner in the United Kingdom, to look up Dobri Dobrev, a Bulgarian centenarian who lost most of his hearing in World War II. Dobrev has walked several kilometers a day in recent years to beg in a nearby town. Living on a very modest state pension, he gives the entire proceeds of his begging to orphanages that can’t pay their bills and to monasteries that are falling down. Although not life planned, he is clearly living his life plan with entrepreneurial endeavor.
The Political Economics of Life Planning
In political economics, I view seven factors as essential to a healthy economy and society. I have called them the “seven sanctities,” although they could as easily be called the “seven integrities.” They involve the integrity of products, advice, markets, entrepreneurial activity, democracy, media, and leadership. Entrepreneurial activity is at the center; it is the driving force. The economies and societies that foster it become leading civilizations. The integration of financial planning with life planning creates the most effective way of delivering entrepreneurial action into society—far more effective than fiscal or monetary policy, which can be compared to using a sledge hammer to kill an ant.
Life planning delivers entrepreneurial endeavor directly as it moves naturally through the five phases of EVOKE. Financial “advice” as it has been traditionally given is a parody of life planning, putting products, sales, and profits ahead of the client. It creates dissension and distrust throughout society and undermines efficient markets as well as basic efficiencies within a client’s life. Both clients and markets are misled and products misapplied.
Just as a life plan requires a secure financial foundation to sustain it, the entrepreneurial energy of a society as released in life planning requires the other six sanctities or integrities in order to be sustainable. It requires integrity of product, advice, markets, democracy, media, and leadership.
Leadership Is Key
As life planners we create successful businesses, stimulate entrepreneurial endeavor in everyone we meet, and outpace other areas of financial services in growth, profitability, and satisfaction. In doing so we exhibit leadership that over time will transform financial services into the client-centered business that it is destined to be and that the term “service” implies.
Leadership is key to this transformation. Without powerful leadership, transformation is slow. The fee-only movement began in earnest 30 years ago. It’s had a huge impact on all of us, yet “advice” in America and across the world is still dominated by products.
One hardly thinks of Iran when one thinks of integrity or leadership or financial services. But recently, when billionaire banker Mahafarid Amir-Khosravi was summarily executed for his role in perpetrating the largest bank fraud in Iran’s history, this question crossed many people’s minds: How long would the banking crisis in the West (that still gives us almost daily headlines of massive fraud) have lasted if we had zero tolerance for CEOs and board members who presided over the dark actions in our crisis?
It certainly seems that our leaders have not understood that their ladders are on the wrong wall. But life planners have. We understand that we’re in a new world, a fiduciary world, a life planning world where the client comes first. We understand that to model integrity and deliver freedom is the only way forward in financial services. And so we model it in our cottage industry of great firms.
Considering how slowly transformation occurs, I think it’s time to do more. I think it’s time to demonstrate with a large firm that we can institutionalize modeling integrity and delivering freedom and do it across all income and asset levels. That’s why I’m spending many months a year in the U.K., where their legislation (the Retail Distribution Review) and regulators have been far more effective in delivering new standards for advice than we have in the U.S. In the U.K., we are working to build a large financial life planning firm called LifeSpire dedicated to serve all levels of society.
As financial planners, regardless of where we live or what else we may do, the standard of fiduciary action, life planning, and “financial planning done right” is one to hold high, to lead within our communities and our nations in whatever ways we can.