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Main Street Money: Is financial planning only for the wealthy?

By Stephen Kelley - | May 23, 2018

When was the last time you went to a doctor? Do you remember how that appointment went? The last time I went, my doctor weighed me, asked me questions about how I was feeling, looked at a blood test I took, poked and prodded me with various instruments and popsicle sticks, and sent me on my way with a renewed prescription.

What she did not do was show me a special on some kind of medication or procedure, other than a flu shot. She spent her time looking at, talking to, and evaluating me. Once she was quite certain what my issues were, she delivered her suggestion, which was a referral to a specialist. That’s the way it should be.

Now, imagine, instead of that, the doctor lead with a special of some kind. Perhaps the local MRI unit was paying GPs a bonus for referrals, and when I went in, she began looking for a reason to sell me an MRI. One of the things that’s been bothering me lately is nerve pain in my legs. I have tested negative for diabetes, so that wasn’t the cause. So, she sent me to a neurologist who specializes in this type of pain, but she could have just as easily justified sending me to have an MRI. If you found out that’s how your doctor operated, how would it make you feel? Probably not too well.

So how come we allow that model with our money managers and brokers? I believe it’s largely because the financial industry has promoted the idea that financial planning and money management are synonymous. Many “advisors,” for example, have a favorite group of funds and products they use for everyone who crosses their threshold. I know insurance agents who always sell the same annuity and life products, regardless of whom they are talking to or what their situation is. I know money managers who always use the same sets of funds, again regardless of their clients’ situations, or often, the market conditions. I know one fellow who sells everyone who walks through his door the same variable annuity. These people like to discuss the process they use to move clients through their “process,” which is always a process to get clients to buy.

In reality, money management is a piece of the financial planning process. The problem with our current system, however, is that’s where the money is. Most brokers and registered reps don’t receive anything for the planning process; it’s the movement of money that rewards them. Therefore, that’s where they want to spend their time.

Another way this harms people is it often leads to the false belief financial planning is only for the wealthy. This is easy to do when you think the process is about the money and not the person. If it’s about the money and you don’t have a lot, you could be excused for thinking a financial plan would not be able to do much for you. The truth, however, is the person with less money needs the planning more than the person with money. The person with less will have a more difficult time making it last over a potential 20- to 30-year retirement. This person needs a good cash flow plan and budget so they can control costs and make their money last.

These misconceptions are further reinforced when prominent money managers who like to promote themselves as planners, focus on products and available assets. How can you know when a planner is more focused on money than people? You can start by looking at their marketing and client profiles. For example, there is one very prominent figure who spends millions every year trashing annuities and marketing to people with over $500,000 in investable assets. The message is very clear. It’s about your money and products we like or don’t like. It’s not about you.

On the other hand, if a planner will take all comers without looking at their financial profile, chances are their focus is more on the people involved than it is on the money. Our criteria are threefold. They are:

1. Are you coachable. If you are not going to listen and follow our suggestions, what’s the point?

2. Can we help you. People may be coachable, but due to their circumstances, there is very little we can do for them. Often in these situations, we will look for a way to help or a referral. But we won’t spend a lot of time if we don’t believe we can make a meaningful impact.

3. Do we like each other? I am certainly not going to enter into a multi-year relationship with someone I don’t like. You should look at this one, too. Unless you have a good feeling about the person you are working with, you probably won’t be very coachable, and so we are back at number one.

Does this mean I will see people who can’t really afford us who will nevertheless end up being helped by us? Of course. But don’t you see? That’s the point. It’s the only way I can guarantee to myself that my focus remains on what’s really important: the impact I can make on people’s lives. When my focus remains on that, my income takes care of itself.

And I end up being a much happier man.

Stephen Kelley is a recognized leader in retirement income planning. Located in Nashua, NH, he services Greater Boston and the New England areas. He is author of five books, including “Tell Me When You’re Going to Die,” which deals with the problem unknown lifespans create for retirement planning. It and his other books are available on Amazon.com. He can be heard every weekend on the “Free to Retire” radio show on WCAP and WGIR, and he conducts planning workshops at his New England Adult Learning Center, located in Nashua. Initial consultations are always free. You can reach Steve at 603-881-8811 or at www.FreeToRetireRadio.com.


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