Let's Stay Together
Co-creation and Your Financial Success
Perhaps you have heard of the “human first” movement in financial planning. No? Welcome to the majority.
As a 19 year financial planning practitioner, this movement is something I have been working to embed in our processes and practice for several years now. It is tautological to say we are all human. What does it mean to say so? Far more importantly, what does it take to deal with money, ours and our clients’, as a human and to help other humans with money?
Humans Versus Financial Advice
It means that every interaction, every email, every conversation, every text is a two behavioral way street with at least two humans (we may be working jointly with your attorney, CPA, and others). Each person involved in the interaction has experiences, characteristics, biases, emotions, triggers, and an incredibly powerful, poorly understood processor - the brain. You and I both bring a lifetime of experiences to the conversation. The likelihood that we think the same way and experience the same emotions and reactions during our interaction is ludicrously low.
How I, as your advisor, choose to view your situation, how I consider and apply my own biases, the extent I am aware of my own behaviors, and how I treat you affects what you do with your money. This is what it is to be human with money and to advise humans regarding money. Perhaps it is much easier to simply be a mechanic, no?
Yes, I can attempt to be a mechanic. I can do the math (the easy part, BTW), or, more likely, the machine I employ does the math. The math shows us certain things. There are templates of solutions that have a high probability of being successful. I can build standard models, ones that work in most scenarios like yours, and apply one to you. You can argue that this is the professional way for me to conduct myself. For sure, this is both a traditional, perfectly professional method. It might work, with the emphasis on might.
Then I put words to the math and proposed solutions. I decide, maybe consciously, what to emphasize. What do I mean by maybe consciously? We all “think fast and slow.” We all have intuitive and unconscious decision-making (“System 1”) processes and thoughtfully deliberative, theoretically logical (“System 2”) processes. As I do this, I place priorities and emphasis on some things over others. As much as I deem myself a professional, I might not always think through everything clearly (shocking, no doubt, but I am just as fallible as everyone else). The emphasis and priority may or may not be in concert with your thinking and emotions. You ask me for recommendations, and as your advisor and fiduciary, it is my duty to provide them. So the mechanic notion, no matter how hard we may try to be a great mechanic, and we might well be great mechanics, completely falls apart, even if that is what you want me to be. Because humans, behaviors, emotions.
Won’t the emergence of AI fix this? Emphatically, no. More on this, later.
Effective financial planning requires a trusting relationship. No, it is not marriage, although there are many similarities. We have to stay together long enough to create value for you. Our team has to understand you, what you want, how you think and make decisions, and how to frame our recommendations in a way that enables you to listen to what we are saying. If we do this properly, you just might be on the path to flourishing.
What in the world is flourishing, and what would financial advice have to do with it? Flourishing is a multi-faceted concept. And it is much more than a concept. There is science to back up the concept. It is something that you can go and choose/find/create/do through the use of positive psychology. Take a listen and watch Dr. Martin Seligman discuss his research and findings.
Is effective financial advice the source of flourishing? No. Is it a component of flourishing? I believe the answer is yes. Does it seem like I have taken a big, Bill Walton-esque detour regarding human-first advice. I do not believe so.
“In my view, money is in the service of well-being”.
Purpose of Advice, Advice of Purpose
As you build wealth, the key decision is what you do with you wealth. Flourishing calls for you using your wealth in a way that leads to eudemonia. This is what human-first planning is all about. It is about working with you, understanding your purpose, and aligning your money, a tool, with your purpose. This is why I have a hard time thinking that a purposefully, deeply meaningful, human interaction will be displaced by any AI tool.
I believe that excellent advisors, the ones who know they do not know everything, the ones who look for evidence to disconfirm their beliefs, will adopt AI tools as another tool in the toolbox. Like just about every technology since the discovery of fire or the principles of electro-magnetism (and, hence, widely distributed electricity, phone, and internet services, for example), most of us are fearful of what AI can/will do. And like every technology, over time I think it will enhance our ability to get better at what we do, will likely create jobs rather than destroy them, and in general we will learn how to enhance the human experience with AI.
My purpose is to help as many people effectively apply their wealth for their own, special purpose, whatever that might be. Maybe you are like Jay Leno, and love cars. You might think it is completely crazy to spend millions of dollars per year maintaining a huge collection, or it might be a labor love, as it is for Mr. Leno.
Listen to his reaction when they open the hood! As an ex-auto mechanic, I can assure you I have similar feelings.
Some people love charitable giving. Others want to use their money for themselves, to live comfortably, to travel, perhaps to have no worries in life relative to living their lives. There is no right or wrong here. There is only your purpose, what you value, how you want to live. This is all about the intersection of what is in your heart and mind. That intersection is what is beautiful for you.
Co-creation
What we have learned over our years in this business, and in my former life as a technology consultant, is the best plans are co-created. This is the one of the critical differences between a mechanic and a human-first advisor. Co-creation requires that we execute a collaborative process. You do not come to us for a tune-up or head gasket replacement. We might do some mechanical work as part of the process. It is likely that we will. Ultimately, you come to us to build or modify a car that transports you throughout a life of change, growth, and purpose.
We start with a process to discover your financial purpose/family financial vision. That drives everything else we do. Collaboratively, we develop a specific cash flow model and forecast. This is updated as your circumstances change, which might be often or infrequent. It is all about you, as silly as that sounds. We may suggest things. We might test an approach or three. We collectively discover what fits you and your human uniqueness.
The plan itself (we are, currently, using eMoney for plan construction and maintenance) may well look like loads of other plans, although we summarize the plan into a one-pager. For those who want to see the gory detail (it is not many people!), we are happy to walk through it - we do love the numbers, you know. At the same time, we know it is not the numbers. It is the intent and collaborative thought that goes into the plan design and the purpose the plan and application of your money enables.
Co-created plans are effective:
You believe in the plan. It is yours, you own it.
It reflects you and your purpose.
The plan will be implemented and followed, changing with and for you throughout your lifetime.
Care for your purpose, stewardship of your resources and money, and recognition that we are both human and dealing with humans are what shape our advice and guidance. Like most things, what we are unlikely to do is create a permanent or fixed answer. We use a recursive process, adapt to change, and apply your money in service of your purpose throughout the story and timeline of your life.
We hope you enjoyed this exploration of financial planning and human behavior. We love feedback. Let us know what you think or what you would like to read/hear about.
Sundry
Most moving song I heard this week.
RIP to one of my heroes, Bill Walton.
Well said all around!