Life planners promise holistic approach to financial advice

Posted: Friday, August 24, 2001

NEW YORK (AP) -- There's a new specialty emerging in the financial planning business. It's called life planning, and practitioners aim for a ''holistic'' approach to an individual's financial needs.

That is, instead of just crunching numbers and determining the most profitable use of assets, these specialized planners try to delve more deeply into what clients' goals are and outline the financial steps needed to reach them.

You won't find ''life planner'' in the phone book yet. And the profession itself is still unsure exactly how this new specialty fits in. A panel at next month's convention of the Financial Planning Association, for example, will debate whether life planning ''is part of financial planning or a new discipline.''

Still, there are a growing number of financial planners who believe people want -- and need -- more guidance about the emotional and social implications of money.

''I think the consumer today is looking for more than a rate of return,'' said Susan Bradley, who runs the Sudden Money Institute in Palm Beach Gardens, Fla. ''They're talking about using money to support life goals. That's a whole different ball game from where should I invest.''

She tells the story of a couple that had long planned to change their lives after receiving a big inheritance. Then they found out that the money -- while a sizable $1.5 million -- wasn't enough to allow both to retire immediately from their jobs, buy the big house of their dreams and pay off all their children's student loans.

''You can't resolve all those issues in a single meeting,'' Bradley said. ''A life planner has to invest a lot more time to help the clients consider alternatives and calculate the financial implications.''

In the case of this couple, it took a series of five meetings to evaluate scenarios that included pricing a smaller house with a mortgage, calculating when the husband could retire or change to a lower-paying job without jeopardizing his pension and discussing alternatives for passing on money to the children.

Ross Levin, a financial planner who heads Accredited Investors Inc. in Edina, Minn., believes life planning ''is in some ways a new name for something many financial planners have been doing for a long time -- trying to bring harmony between a client's values and actions.''

Levin also sees believes it is what consumers want.

''People have read popular books like 'Your Money or Your Life' and they've thought more about what matters to them,'' Levin said. ''They want to spend the time to understand what the issues are around money, a qualitative approach rather than a quantitative approach.''

Because life planning generally involves several visits to a financial adviser's office -- to develop a profile, identify life goals and consider options -- it's often more costly than traditional financial planning.

George Beshara, head of the North American Lifestyle Planning Corp. in Toronto, adds that the financial planning industry has been introducing more fee-based services and is looking for more options for clients.

''Financial advisers have been trained in the numbers and in selling products, but people can now go to the Internet and get financial information, and they can go to discount brokers and get products at lower prices,'' he said. ''Clients are demanding more from financial planners, and they're willing to pay for it.''

Beshara's company offers training courses and software that financial planners can use to help their clients determine lifestyle goals and evaluate alternatives to better balance work and home life and to plan for retirement.

Kathleen Gurney, a specialist in the psychology of money from Sonoma, Calif., believes an increased emphasis on life planning is especially important as the baby boomer generation moves toward retirement. A planning program developed by her company, Financial Psychology Corp., helps planners develop client profiles so they can better respond to clients' emotional needs.

''A lot of baby boomers are unrealistic about the amount of money they need to retire and what they can buy with it,'' she said. ''Life planners can help provide context.''

This, she said, involves taking a client through a self-inventory to help them figure out what really will make them happy. ''Then you have to deal with trade-offs,'' she said. ''Do you need to work longer? How will you prioritize your spending? What about hobbies or volunteering? Do you really need that second home, or could you rent on vacations?''

She adds: ''People find it's easier to make short-term decisions when they're confident of long-term goals.''


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