Financial Planning – A Crucial Life Skill for the 21st Century

Ten years ago…maybe even only five years ago…financial planning was thought of as something that only the very wealthy needed. I am not just referring to services provided to you by an investment advisor or broker. I am referring to the process of having an actual written document drawn up. This financial planning process has several parts.  Each part is designed to lead you toward the development of realistic financial goals, and to provide you with the tools to measure your progress toward reaching those goals.  The process involves assembling financial information, setting goals, looking at your current financial situation, and building a realistic plan to meet your goals.  The planning process is not a one-time event; it is a life-long process of acquiring knowledge, making decisions, revising goals and monitoring progress.

A brief history of the financial planning profession

The financial planning profession is relatively new. Certified Financial Planners first appeared on the scene in the early 1970’s. Compare this with other professions such as medicine, law, education, and accounting…all have been around for hundreds of years.

Initially, most of the planners’ income came from commissioned sales of investment and insurance products. Gradually many migrated to a fee-based structure and the fiduciary mind-set of the profession has strengthened in recent years.

Throughout this evolutionary period, the practitioners’ business models have morphed to meet the needs of the general public. Many of these business models now include life-planning services.  Some have even developed strategic alliances with psychologists helping clients overcome dysfunctional behavior around money. Others are now developing practices that assist clients with managing their careers.  The scope of services offered has grown to match the growing needs of middle America.

Maslow’s hierarchy and the need for planning

G. Norwood (The Truth Vectors – Part I) proposes that Maslow’s hierarchy can be used to describe the kinds of information that individual’s seek at different levels. For example, individuals at the lowest level seek coping information in order to meet their basic needs. Information that is not directly connected to helping a person meet his or her needs in a very short time span is simply left unattended. Individuals at the safety level need helping information. They seek to be assisted in seeing how they can be safe and secure. Enlightening information is sought by individuals seeking to meet their belongingness needs. Quite often this can be found in books or other materials on relationship development. Empowering information is sought by people at the esteem level. They are looking for information on how their ego can be developed. Finally, people in the growth levels of cognitive, aesthetic, and self-actualization seek edifying information. While Norwood does not specifically address the level of transcendence, I believe it safe to say that individuals at this stage would seek information on how to connect to something beyond themselves or to how others could be edified.

Most Americans have solved their basic survivability needs in terms of enough food, clothing and shelter. Past generations, including the baby-boomers, have had the left brain (more orderly, literal, articulate, and to the point) in high gear to provide for these basic needs. However, with those basic needs met, more people are now interested in finding more satisfaction and fulfillment with life (the more visual and intuitive right brained activities).

There are other factors adding fuel to this fire. Longevity, combined with better health and retained energy as we age, is providing more people with the time and desire to pursue meaningful activities.  Furthermore, technology has taken over many of the left-brained tasks allowing us to spend more time with right-brain activities.

Life planning provides answers

A few years ago, when my daughter commented on how quickly her eighth-grade year went by, I gained even more appreciation as to how complex our lives have really become. I remember my eighth-grade year seemed like it was going last forever. However, after comparing all the activities today’s eighth-grader has to choose from, compared to the few I had, I can understand why the speed of life has accelerated even earlier in life.  And…adults have even more choices.

People today are intimidated by how much choice they have. There are almost too many career choices, too many life choices. People are overwhelmed at times by the decisions they get to make-and have to make-about their jobs, their families, their businesses, their futures. There are so many variables today: Where will you work? Where will you live? What do you want for yourself? What do you want for your family? If you don’t have a way to sort it all out, you can become paralyzed.

The following is how Cali Williams Yost, author of Work+Life, explains the issue:

“We are all completely unique.  We are all driven to do the things we do, and take on the amount of responsibilities we take on, for a variety of complicated and equally unique reasons.  Some people thrive on the challenge of managing many different things at the same time, love their job, liking to be busy, needing to make a living to support their family, or wanting to create.  But it all comes down to one question, “What makes you tick?”  There is no right or wrong answer.”

“The funny thing is, in my experience, most people don’t know what makes them tick.  They only know what doesn’t, but can’t articulate what does.  Why?  My theory is that it’s because this is the first generation of workers who have to answer that question, and we don’t know how.”

“In the past, it wasn’t necessary because work was work, life was life.  The boundaries were clearer and more standardized between the two spheres.  Now, with technology and globalization there are no boundaries.   Therefore, we need to play a much bigger role in partnering with our employers to determine what those “mutually-beneficial” boundaries are.  But you can’t come up with the boundaries if you don’t know, “What makes you tick?” 

Determining “What makes you tick?” is all about understanding your purpose in life.  Counselor and author Richard Leider ( explains his laws for finding purpose in your work and life in the following:

“For nearly 25 years, I’ve been doing interviews with senior citizens, asking them to look back over their lives and talk about what they’ve learned. I’ve conducted more than 1,000 interviews with people who were successful in their jobs, who retired from leading companies after distinguished careers. Almost without exception, when these older people look back, they say the same things-things that are instructive and useful for the rest of us as we make decisions going forward in our lives.”

“First, they say that if they could live their lives over again, they would be more reflective. They got so caught up in the doing, they say, that they often lost sight of the meaning. Usually it took a crisis for them to look at their lives in perspective and try to reestablish the context. Looking back, they wish they had stopped at regular intervals to look at the big picture.”

“They also sounded a warning: Life picks up speed. The first half of your life is about getting prepared and getting established. Then time shifts gears. You hit the second half of your life, and everything moves faster. Days turn into weeks, weeks into months, and all of a sudden, you’re 65 years old. Looking back, they say, you realize that time is the most precious currency in life. And as they got older, having time for reflection became even more important.”

“Second, if they could live their lives over again, they would take more risks. In relationships, they would have been more courageous. And in expressing their creative side, they would have taken more chances. I think it was Oliver Wendell Holmes who said, “Most of us go to our graves with our music still inside us.” Many of these people felt that, despite of their successes, their music was still inside them. Almost all of them said that they felt most alive when they took risks. Just being busy from business made them numb. Aliveness came with learning, growing, stretching, exploring.”

“Third, if they could live their lives over again, they would understand what really gave them fulfillment. I call that the power of purpose: doing something that contributes to life, adding value to life beyond yourself. Purpose is always outside yourself, beyond your ego or your financial self-interest.”

“We all want both success and fulfillment. Success is often measured in external ways, but there’s an internal measure of success, and it’s called fulfillment. Fulfillment comes from realizing your talents-adding value and living by your values. Fulfillment comes from integrity, from being who you are and expressing who you are as fully as possible. It doesn’t have to do with your job description or the specifics of your work. It has to do with how you bring your self to your work, regardless of what that work is.”

Due to growing complexity with all the choices they have, the inablility to get their arms around “What makes you tick?”, and the desire for meaning and fulfillment, more people are in need of the empowering and edifying information available through the life planning processs. In our firm, before we even begin the development of the comprehensive plan, our first meetings center on the development/clarification of your “big picture”.  We believe that the more specific you are about the life you want to create, the easier it becomes to develop a strategy to accomplish it.


About Don James, CPA/PFS, CFP
Don is the Tax & Financial Planning partner with Kiplinger & Co., CPAs headquartered in sunny Cleveland, Ohio since 1982. He partners with business owners and families and specializes in goal achievement solutions, tax minimization strategies and serves in the role of gatekeeper of sound financial advice.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: