What if the financial plan you’ve worked so hard to create is leading you to a life YOU (and your family) don’t really want?
By now, most financial advisors are helping clients begin with the end in mind—-starting with where you want to go and reverse engineering to find the appropriate savings rate, spending, asset allocation, and other important factors in a financial plan. Thankfully, after years of focusing on sales, stock recommendations, and transactional relationships the profession is slowly (quicker in certain segments of the financial advice world) moving towards a profession of advice, guidance, and planning.
Although more advisors are starting with the end to construct financial plans for their clients, I’m afraid the end they are starting with is the “wrong” end. Most financial plans are focused on retirement, college funding, and maybe some travel–these are the goals financial advisors have been trained to understand and plan for. All of the planning tools we use have calculators, simulations, and resources to help plan for lives leading toward these traditional goals.
My question to you is, is the traditional end you are starting from the one you really want? Or more importantly, is that the life associated with your financial plan the one that you are supposed to be living?
In late December of ‘22 I started writing about the Pursuit of the authentic life in my Daily Notes, and I don’t believe the traditional approach to financial planning is creating a plan for you to live your authentic life. This is not the fault of your financial advisor–they haven’t been trained to create plans outside of spreadsheets and tools. It’s also not your fault because there is a good chance you don’t know what your authentic life looks like–you haven’t been encouraged to find who you truly are and find the life that allows you to live authentically. You’ve been programmed to go to school, get married, find a career, grind it out, and retire and finally live later in life…I will admit more people are questioning this life path and deviating from it, but by and large this is still the narrative most people are told and blindly follow..
Starting the financial planning process with an end in mind was a good transition from the old sales environment but it is no longer where we should begin the process. Before you can start with the end, you need to begin with figuring out WHO you really are, what you really want to be doing, and what your authentic life looks like?
You need to make sure you are starting with the right end for YOU in mind.
This might mean you need to do some work on YOU before you can actually start to create the financial plan that aligns with your authentic life. This doesn’t mean you have to wait to start the planning process though. There are financial planning fundamentals that can be addressed as you seek to discover your true Self and authentic life. The fundamentals like life insurance, disability insurance, estate planning, cash flow understanding (budgeting and emergency funds) are important and necessary components that are not significantly impacted by your planning for your authentic life.
The rest of your financial plan is highly impacted by the needs of your authentic life–throw out the standard goals we’ve all been programmed with…well don’t throw them out because retirement, college, home purchases, etc. are still going to be important milestones in your journey but should not be the guiding goals for your plan, but focus on the goals that may not fall in line with the traditional goals you’ve been programmed with but align with your true Self and authentic life.
Asset allocation, asset location, savings rate, and other components of your financial plan are dictated by the path you would like to take. The financial advice profession loves to throw out rules and generalizations for everyone to follow but aren’t always the right strategies for every situation. For example, a general (and good for most) piece of financial advice is to max out your 401(k) as soon as possible. This is great advice to follow if your time horizon for those funds is 30+ years out. But, if your authentic life requires you to have access to funds before 59 ½ (or 55 in some situations), maxing out your 401(k) may not be right for you.
Maybe it’s saving into a taxable account.
Maybe it’s stacking cash.
Maybe it’s putting it into real estate.
Maybe it’s countless other possibilities.
The reality is there is not a universal “right” way to build your financial plan–it’s all dictated by your authentic life.
Approaching your financial planning from your authentic life may not be about maximizing the spreadsheet attached to the financial planning software–you might end up with a portfolio that is not the most tax-efficient but it is efficiently designed for the needs of your authentic life! Your plan should be built to optimize your authentic life, not a spreadsheet.
I’ve put my money where my mouth is with this approach to financial planning. I’ve redesigned the future of RLS Wealth and it is focused on helping clients, existing if they want and new ones, find their authentic life and building financial plans that will help them bring that life to their reality. To learn more about LifeDesign+ you can check this post out from the RLS Wealth website.
Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page.