The first thing I do with a new client is discuss their goals and objectives. I do my best to pull out their dreams about the future. My goal is to understand what they want and more importantly have them define it. More than once, I have seen clients close their eyes and actually visualize these things. It’s very powerful.
From there we figure out where they are at today. I need to understand their current situation. I need to know their assets, liabilities, incomes and expenses. After I have gathered all the facts I go back to my office and analyze their situation.
I am trying to figure out if what they are doing will eventually lead to the future that they want.
Like any good planner I put together the charts, graphs and simulations to understand the probability of them reaching success. I make recommendations and put together an action plan for us to implement so they can accomplish their goals and objectives.
Most people think the financial planning ends there….. However, everything I have described is the science of planning and is only the beginning of the journey. The true power of Financial Planning is the ART.
The art of Financial Planning is everything that happens after a plan is set in motion. The art comes from the bobbing and weaving around obstacles that life throws in our way.
Layoffs
Sickness
Additional Children
Family Troubles.
Desire to Keep Up with the Jones
Market Declines
Many people think creating a financial plan is a single event. But in reality it is a life long process. It’s best to understand that art is rarely perfect and its’ beautify is in the eye of the beholder.
Some people prefer art that looks like this.
or this..
or this.
http://fun.stylebaby.com/beautiful-famous-paintings-time/
Your financial success can be viewed the same way. Its’ beauty is in the eye of the beholder. And that beholder is you.
To take it a step further,it’s not uncommon for the goals that were established while doing the science of Financial Planning to be changed, flipped, or deleted all together.
More art.
How much money do I put down to buy the house? Should I lease or buy the car? How should I pay for my kids college?
Every financial decision we make will have an impact on a future decision. When we choose to use a dollar today, we can not use it tomorrow. So, it’s best to understand that each decision affects everything else.
No, I am not talking about the difference between a Tall VS Grande Latte at Starbucks, but the big stuff.
$500,000 house vs a $750,000 house. Maxing out the 401k vs not participating at all. Choosing this college or that. We think they are science type decisions, but in reality they are more art.
Why?
Because we can’t see the future. We think we are making the best decision but the future unknowns can derail them. In science there is a specific outcome for every experiment. Outcomes that are tested and measured. When making art the end result is a lot more rough.
You might be wondering, so what’s the point? Why even bother if everything is a huge unknown?
Well, in my experience I have seen those that go through the process and do the most science create the best ART. Without building a plan, the simplest problems can hurt financial success. You have to be able to deal with the ebb and flow of life and it’s easiest when there is money in the bank and target to aim at. This ultimately why Financial Planning is an ART and a SCIENCE.
It’s best to think of financial planning as a series of course correcting events that take place as we go through life. The science keeps us on a course that can be charted and measured, while the art helps us deal with the all detours and side trips that are sure to come our way.
-Jared
