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Financial Life Planning

A Personal Definition of Risk

A Personal Definition of Risk

"Being the richest man in the cemetery doesn't matter to me. Going to bed at night saying we've done something wonderful... that's what matters to me."

-Steve Jobs

When thinking of financial planning and investing, the assumed purpose is wealth maximization. In a broad sense, this is accurate. You wouldn’t engage in these activities with the hope of losing money. Yet, in reality, increasing your wealth is not the ultimate goal, only a tactic to help you achieve something far more important.

The true purpose of financial planning and investing is to achieve greater freedom; freedom that will enable you to live the life you want. When viewed in this context, risk becomes less about market gyrations and the volatility of your portfolio and much more about whether or not you are moving toward the life you want.

The first step in the financial planning process should, therefore, be focused on gaining clarity on what’s important to you and what you want your life to look like. The best way I’ve discovered to accomplish this is by exploring deeper and more reflective questions than are typically asked in a financial advisor’s office. For example, imagining what you would do if you had all the money you needed, but also reflecting on what you would miss out on if you had only 24 hours left to live. Another exercise might ask you to think about your ideal day, week, and year and then contrast it with your current reality.

Questions and exercises like these, while not directly related to your money, help you gain clarity and help us understand what is most important to you. Once we know what the big picture looks like we can begin drafting a plan with quantifiable and actionable goals that will bring you closer to living the life you want.

Aspects such as investing, taxes, insurance, and estate planning are all still critical components of your plan and ones that should indeed be optimized. The difference is that they should be optimized not just within the context of your finances, but also your life goals. The result will be a truly integrated financial life plan that not only mitigates financial risk but also reduces the risk of missing out on the life you want.

Featured in the Wall Street Journal

Featured in the Wall Street Journal

In this weekend’s edition of the Wall Street Journal there is a thoughtful article titled “A Therapeutic Approach to Financial Planning” that highlights the budding movement of integrating emotional and psychological aspects of one’s life into the financial planning process. Our approach at Laminar Wealth, while not therapy, falls into that spectrum and piqued the interest of WSJ journalist, Anne Tergesen, who asked to interview me for the article.

During our forty-five minute interview we discussed among other things, how our discovery process focuses much more on life aspirations than bank statements; how we see financial planning as a tool to not only build greater wealth, but also a more meaningful life; and how building a financial plan that places one’s dreams at the center compels action around the whole financial picture.

At Laminar, we refer to the work we do as Financial Life Planning, because it merges your money with your life in a meaningful way. While our process can certainly be therapeutic, it is not therapy. Our goal is simply to help clients realize their life aspirations and then craft a financial plan that can make it a reality with appropriate financial architecture. To us this is just financial planning done right!

The reason some clients and practitioners call it “therapeutic" is that the discovery process and delivery of the plan is often so insightful and inspiring that clients experience a sense of renewed freedom and passion. This cathartic experience often melts away many of the obstacles that had been holding them back from articulating and pursuing the life they truly want.

I encourage you all to read the WSJ article and would love to hear your thoughts. It’s very exciting that the idea of Financial Life Planning is starting to get widespread exposure, and even more exciting to be at the forefront of it!

If you don’t get the print edition of the Wall Street Journal, you can access it online. If the link takes you to the WSJ “pay wall” try googling “A Therapeutic Approach to Financial Planning” and access the article from the link in the search results.

Posted: August 1, 2015

Envisioning and Defining Retirement

Envisioning and Defining Retirement

About a month ago the American Institute of Public Accountants (AICPA) held a retirement planning symposium in New York City. I was honored when they asked me to participate as one of the four CPA Financial Planners. The focus of our discussion was centered on the current challenges clients and their planners are facing as they contemplate retirement. The conversations were recorded and then broken into 10-minute clips and posted online. Over the coming weeks, I will share many of these videos with you as I think you will find them to be interesting and relevant.

This week’s video is about envisioning and defining retirement. One of the main issues I spoke about was how my role as a financial planner is more than just retirement planning. While retirement may be a tactic, there is usually a more profound life goal that should be the center of the financial plan. So instead of asking what age you want to retire at, a better question may be, “How do you envision life in your 60s, 70, and 80s?” For younger clients, it is about making decisions on how to structure your lives now so you do not have to wait until traditional retirement age to start living the life you truly want. The video clip is about nine minutes long and filled with great perspectives from the entire panel, however, if you want to skip to my thoughts it starts at 3:15. Enjoy!

Posted: July 2015

Featured in Money Magazine

Featured in Money Magazine

In the June 2015 edition of Money Magazine, there is an article about how to pass on not only your valuables to your heirs (traditional estate planning) but also your values. The journalist, Jackie Zimmermann, interviewed me while she was writing the article and included a number of my thoughts as well as a quote.

The first topic I discussed with her was how to figure out what is important to you and therefore which values you might want to pass on. During the past year and a half I have spent a lot of time learning and training in the practice of financial life planning. For those unfamiliar with the terminology, financial life planning is an approach to financial planning with the premise that your finances should be designed to support your life goals rather than building your life around your money. Approaching financial planning through this lens has had an enormous impact on my own life decisions, and I have had the privilege to witness some of the inspirational changes in the lives of a number of my clients too. One of the things I have learned is that our goals often fall into three different buckets:

  1. Heart’s Core—things you must do for your life to have meaning
  2. Ought To—areas where you feel an obligation or sense of responsibility
  3. Fun To—things you would like, but do not have the same sense of passion as “Heart’s Core"

One of the exercises that is now a part of my financial planning process is helping clients organize their goals into these buckets and considering not only things they would like to have, but also what they would like to do and who they would like to be. In addition to a more focused financial plan, most clients also walk away with a deeper understanding of what is really important to them, their values. When I shared this with the journalist she thought it was the perfect starting point for people to figure out how to approach the softer side of legacy (estate) planning and devoted an entire section of the article to it.

Another topic we discussed was how to make sure gifts actually have a positive impact on the recipient. It can be tempting to place conditions on gifts in an effort to encourage certain behavior and values, but I cautioned that the giver should tread lightly as it can backfire if it leads to feelings of manipulation or resentment. Instead of attaching strings to a monetary gift in an effort to enforce certain behavior, I believe the best way to pass on values is by modeling the way and having open conversations with the beneficiaries. Live the type of life you want your heirs adopt and include them in your life so they can see why it is important and be inspired to do something similar in their own lives.

In my own family, my grandparents have inspired an unprecedented sense of family unity and togetherness by hosting family get-togethers twice a year since I was a child. Everyone (four generations now) is invited and attendance is very high simply because we all want to see each other and have so much fun together. The relationships I have built with my grandparents, as well as my aunts, uncles, and cousins are stronger than any other extended family I know, especially considering we are spread throughout the country. I attribute this to the strong values and adept foresight of my grandparents and suspect these extended family relationships will continue and perpetuate down our own family branches for generations to come. Without a doubt, this is the best gift they have given to all of us.

If you are interested in reading the article, it’s on page 40 of the June 2015 edition of Money Magazine. If you are interested in discussing your own legacy planning or financial life planning, whether you are an existing client or not, contact me. I would welcome the opportunity to explore this with you.