What type of personality is 'financial planning' difficult for?
WRITTEN BY: Gideon Drucker, CFP® AIF® ECA
For some people, putting together a financial plan can be difficult to wrap their heads around.
It’s not the cost that gets them.
It’s not the financial terms or talking about “money” that get them.
It’s not having to go through their expenses and it’s not having to think about a potential injury/unexpected death.
No, some people have a really difficult time with planning around “uncertainty.”
Putting together a financial plan is like completing a big jigsaw puzzle. But it can best be described as putting together a big jigsaw puzzle while missing a bunch of important pieces. And like if you were to complete a puzzle without all of the pieces, we have to be comfortable with the idea that we can make important strides AND that it will not be perfect or fit together seamlessly....these two facts are not at odds.
Why?
Because when our team completes the actual financial planning work - assessing current & future cash flows, mapping out retirement probabilities, discussing different future scenarios- we are doing so with an unknowable future. We don’t know exactly how much money you’ll make in 5 years, what type of college your daughter will go to, what the market will do over the next decade or even when you’ll actually want to retire when you reach that stage of life.
And this can drive overly analytical clients (typically “engineering” brained) crazy. They can get so wrapped up in our (and their own) analysis that they start to obsess over tiny details around future outcomes that haven’t materialized yet. They get so bogged down in the elements of the plan that don’t truly matter while ignoring the components that do.
I recently designed a financial plan with a family who reached out for the first time a year before we actually got started. I remember John saying, on that first call, that he’s never completed a financial plan because it always seemed kind of crazy to do so before he really had all of the relevant numbers “at hand.” I remember asking him, a bit tongue in cheek, when he thought he would have those figures? He got the point. In the course of waiting to have all of the “inputs” ready...he had missed opportunities (low hanging fruit as it were) within his plan to make tactical improvements and to allow his future to become a LITTLE less hazy.
That’s what planning for the future is. It’s painting a picture of the future in broad outlines so that over time, we can color in the lines.
Planning is just as much about the important questions that linger as it is about the way you answer at this moment in time:
Questions like...
“What are you building wealth for?"
"How do you want to spend your wealth later on?"
"How can your money be used for maximum happiness for your family?”
“How are you going to be taxed later on?”
This plan is a roadmap...a way for us to eliminate as many future surprises as possible by making plans now.
No plan, based on an unknowable future, can be perfect....but if approached with the right mindset, there is NOBODY that I’ve ever met that wouldn’t be better served by having a financial plan put in place.
If only they can get out of their own way.
As always, you can schedule a 15 Minute Right Fit Call here.