Personal Financial Planning (PFP)
Fundamentally importantly, from our perspective, the core noun in the three word term "Personal Financial Planning" is planning. Personal and financial are “merely” adjective modifiers intended to focus in on or narrow down what type of planning is being addressed. We say this clearly and right up front because to us, planning, and the goal setting and strategy inherent in it, is really what this is all about. We are planners and strategists at heart and we think and act accordingly.
PFP is generally considered to have about six important and thus fairly commonly recognized subsets, facets, or aspects, that we as trained professionals will help you focus in on as indicated in your situation, and ultimately tie or integrate together towards your desired ends as follows:
- Financial management
- Risk management
- Estate planning
- Retirement/benefits planning
- Investment planning
- Tax planning
In order to paint a hopefully useful picture here, please consider, in your mind’s eye, an umbrella, a PFP umbrella with an array of metal tines, each of which bears the name of one of those six personal financial planning subsets enumerated above. To carry the metaphor further, consider that the metal tines are covered with, and thus integrally connected by a fabric, such that any internal or outside forces effecting any of them moves, or otherwise impacts on, to one degree or another, all of them. To complete this mental picture based metaphor, consider that the fabric covered tines are based upon and connected to a handle, with the handle representing what matters most to you,… your purpose or raison d'etre, as fleshed out by your professionally facilitated (by us!) written articulation of your values, vision, mission, goals and objectives.
We bring all our resources, human and otherwise, including training, experience, resourcefulness, connections, process, and technology to bear, as indicated, in every single case to help our clients with every salient part of that “PFP umbrella”. Our planning support services include help in clarifying and articulating, in writing, what matters most to you and why, and addressing and integrating each of the above listed subsets of PFP in such a manner as to improve the alignment of your unique resources, including both your financial and material capital, as well as your human capital, with what you have clarified and articulated holds value to you. Thus, we think of ourselves not just as planners, but as Resource Alignment Specialists. As such, our role is to help you align all your resources in such a manner as to either accelerate the accomplishment of your goals and thus expedite the realization of your vision, or to improve the overall likelihood of the goals ultimately being realized, or, as we observe most commonly in practice, some combination of both of the above. In other words, we strive to help you, as indicated, with tightening up both the timing and the certainty of realizing your vision and thus living your life on purpose.
Real, professionally facilitated personal financial planning is pretty much of a lifelong journey, and one on which it is seldom too early or too late to embark. As facilitators along this lifelong path of conversation, discovery, conscious intent, analysis, strategy, and thoughtful actions, we will serve variously as your guides, your advisors, your sounding board, your coach, your information resource, your implementation support, and very importantly, your advocate. We are our clients “go to” place for information, and decision support in myriad aspects of life.
Our planning clients typically put us on their “payroll” for an ongoing, monthly-paid annual fee that positions our planning perspective, guidance, and support literally just an email, phone call, or visit away. The first year or two of a new engagement is what we term the organizational stage wherein we help clients clarify and articulate goals in writing and make a first cut through on "covering the bases" of the various tines of the financial planning umbrella referenced above. After that, the labor, meeting time, and overall communication intensity may subside. As the relationship matures, periodic reviews and planner access for questions, guidance, coaching, technical, and logistical support then become more important.
In a conscious effort to "keep it real", and optimally serve the interests of all parties involved, and to mitigate the need for sudden, sharp unpredictable increases in the cost of our planning services to our clients, our planning fees adjust automatically each year. As with adjustable rate mortgages, which are designed to reflect current conditions, the annual fee adjustment is based on a price index plus a margin. The price index is the prior calendar year's percentage change, if any, up or down, in the U.S. Bureau of Labor Statistics' Consumer Price Index, or CPI. The margin is one percent. For example, in a year wherein the prior year's CPI change reflected the Federal Reserve's annual U.S. inflation target of two percent, our clients' planning fees would reset to a level three percent above the prior year (2% CPI change + 1% margin). The index number is to keep the cost "real" in inflation adjusted or purchasing power terms. The margin component provides a merit element that compensates your provider for ongoing professional development and associated continuous improvement in service provision and quality that we believe you should expect. This structure is intended and designed in large part to smooth our clients' cost of planning through time, improving its predictability and thus its control-ability. Because controlling costs is fundamental to effective, value-adding professional personal financial planning engagements, we've expressly designed our pricing mode to be a part of the overall solution.
Deep planning support is surprisingly affordable to most people. If you’ve read this far, you are very likely a good candidate for our PFP services. Importantly, nominal fee cost for our services is inherently only a true net cost to our clients to the extent they perceive no offsetting value-add in return for payment of those fees. In our experience, that latter perception is very rarely the case. By completion of a roughly two year organizational stage, if we are not bringing palpable value of either the tangible or intangible variety, then there may be a fundamental mis-fit between your expectations and our service offer such that the engagement is simply not a constructive one and therefore needs redefinition, or possibly even discontinuation. More typically, it is not uncommon for us to provide, in the regular course of planning conversation and casework, small, individual pieces of planning guidance that, on their own, wind up making or saving clients several years of planning fee costs. Real planning pays, it doesn’t cost,...otherwise, it is wholly nonsensical and not something we, as professional fiduciaries, care to be a part of. Ultimately, you of course, are the judge of this. Or, per the following paragraph, and please read on below, perhaps your then very grateful surviving spouse, children, grandchildren, or charitable cause may be.
An economist's look at asymmetry of information between the buyer and the seller of a good or a service, may be most illustrative and helpfully instructive here. George Akerloff's Nobel Prize winning work in Lemon Theory would likely characterize PFP as being either an "experience" service, or in some instances, perhaps more of a "credence" service. In Lemon Theory, experience goods and/or services are those that, as the name implies, must actually be experienced, like a movie, or a restaurant meal, or a used car (thus the name of Akerloff's theory), in order for the buyer to know anywhere near as much about the good or the service, and thus be able to appreciate its true value, as does the seller. With credence goods and services on the other hand, even considerable experience may not tell the buyer of the good or the service anywhere near the whole story of value. As referenced above, it may be one or two generations later when the real value of one's planning becomes most clear. In the instance of a credence good or service, such as PFP, where the purchaser not only does not and to some extent definitionally can not be expected to know as much about real value as does the seller (the case of very asymmetrical information), the purchaser/client themselves may actually never fully know the value,...it may literally be their surviving spouse, children, or even grandchildren that are best positioned to most clearly recognize the value the planning service delivered. Because PFP, as with medical services, can, in some situations, be as much of a credence service as it is an experience service, planner selection and committed engagement in the process ultimately may involve a very considerable leap of faith on the part of the client. This implies that a very high degree of due diligence is called for. The moral of this story in this instance is that one needs to be very discerning when selecting and employing the services of personal financial planners, because mere consumption of, i.e., experience with the provider and the service doesn't necessarily readily render realtime clarity around its actual big picture long term value. Such, for better or for worse, can be inherent in the nature of credence goods and services.
Beyond the planning casework itself, we can also help you with implementation, either directly, in areas such as investments and certain insurances wherein we are duly qualified and licensed, or otherwise indirectly via referral, and/or liasoning, as indicated per the situation.
Who are our clients? We are an eclectic, three decades plus old referral based planning firm serving a geographically and demographically pretty widely ranging variety of clients. Because of that, our clientele includes young, future-oriented people just starting out in life and seeking to do things right starting early, to highly accomplished and exceedingly actualized and successful mature adults, and of course a very wide swath of many thoughtful individuals and families in between.
Please contact us to see about scheduling a visit to find out how we may be able to help you with professional planning support and at what fee level. You may rest assured that no one will take your life and your business more seriously, nor treat it more confidentially than we will. And, per the above, we understand and very much appreciate the leap of faith one makes in hiring a personal financial planner. We will endeavor from the outset to earn any trust you place in us. Thank you.