Design for Living: Looking Beyond the Numbers

Kim Potgieter

Director, Chartered Wealth Solutions and Managing Director, The Financial Life Planning Institute, South Africa

Imagine your doctor tells you that you have 24 hours to live. Reflecting on your life, do you have any regrets? What didn’t you get to do? What would you do with your last 24 hours?

This isn’t another self-help questionnaire—it’s a real-life exercise that financial planners or, more specifically, “life planners” go through with their clients.

Financial life planning is transforming the traditional financial planning industry. Times have changed.

The newest thinking in the international financial planning arena adds human capital––everything from earning capacity to feelings of personal satisfaction––to the equation.

This introspective approach to financial planning is called financial life planning and is finding strong resonance with a new generation of retirees. It is a practical and personal solution for a generation who are doing retirement in a completely different way than their parents. People have realized that they are retiring from their jobs, not their life.

Financial life planning can assist with this by incorporating your dreams, passions, and purpose into your budget, investments, and estate planning.

While financial life planning has already gained ground in the United States, this new-age view of retirement planning is revolutionary for South Africans, many of whom still view retirement as the end of their life, instead of the beginning of a new phase. In fact, retirement should not be viewed as a single event but as one of many transitions in a continuum of life experiences.

Like traditional financial planners, life planners build a roadmap, with asset-allocation models, estate planning advice, and tax-cutting strategies. But because the “life” part serves as the foundation of the formal plan, the advice given is often very different from what a traditional financial planner would give.

For example, a client may tell his adviser that he dreams about owning a seaside investment property that he could use for family vacations and gatherings. A traditional financial planner might show him how working an additional five hours a week for the next 10 years could help him achieve that goal. The life planner digs deeper and discovers that what his client really wants more than the vacation house is a closer bond with his six-year-old child. The traditional plan would indeed result in a second home in a decade, but at the expense of treasured time with his family.

The concept of financial life planning strikes a chord with most people planning their retirement. They need a vision for how they want to spend the rest of their lives.

“Retirement isn’t what it’s cracked up to be––at least the version that’s promoted by financial services companies, featuring endless golf, leisure, and watching sunsets on the veranda. That sort of retirement––‘our father’s retirement’––can make you sick, depressed, and bored out of your mind,” according to Mitch Anthony, in his seminal book The New Retirementality.

The primary difference between a successful and an unsuccessful retirement is having a purpose. Never underestimate the value and virtue of some kind of work. Work brings dignity to your life. In today’s economic climate, a retirement consisting of a complete cessation of work may simply not be possible—the trick is to find financially rewarding work that fits into your vision and goals of retirement, be it through reduced working hours or a more mentorship/advisory type position.

Retirees are living longer than their parents and incurring much higher medical costs. Traditional retirement planning focuses on amassing capital to retire in the style you are accustomed to. Modern financial life planning actively encourages clients to focus on what’s important to them and then work out how much it will cost to make those dreams a reality.

The real value of undergoing the life-planning process is a financial plan that inspires and motivates you. Do the plans you prepare for your clients achieve that goal? If not, then maybe it’s time to inject some passion into those pie charts!

©Kim Potgieter

Kim is a qualified financial planner, as well as a registered life planner. Armed with a Clinical and Industrial Psychology degree, Kim has a keen interest in the relationship between psychology and money. She is fascinated in the relationship people have with money, and is passionate about inspiring retirees to live with purpose. Kim believes that to have the most fulfilling retirement possible, you have to see it as an exciting journey filled with opportunities. Her favorite question to ask is, “Are you getting the most life out of your money?”

Contact Kim at www.charteredwealth.co.za.