“Financial Life Planning” column by Mitch Anthony at Financial Advisor magazine.
WHO: Mitch Anthony
WHAT: Author, speaker, and founder and president of Advisor Insights and the Financial Life Planning Institute
WHAT’S ON HIS MIND: “For the vast majority, traditional retirement is a really bad idea. So we have an entire industry built around helping people fund their way toward a really bad idea.”
If Mitch Anthony could bring one important observation to the collective financial planning profession, it would be that current discovery processes are not up to par—they need to evolve in order for financial planning to be most effective.
The discovery process needs to be fluid and ongoing; it’s not a one-time event, according to Anthony. Situations change; life is kind of messy. And as Anthony says, “It’s better to prepare than it is to repair.” Planners need to know what changes are coming for their clients, because most of the mistakes people make with their money happen during a big life transition.
To that end, Anthony is working on a new tool to track those life events. He’s also working on the Return on Life Index, designed to help clients answer the question: am I getting my money’s worth out of my life? And, he’s partnering with Steve Sanduski to roll out a new training program call ROL Planning in the next six months.
The Journal recently spoke to Anthony to learn more about his thoughts on return on life, value propositions, and the key to effective client communication.
1. You are the founder of the Financial Life Planning Institute and a leading pioneer in the life planning movement. How do you define “financial life planning”?
Knowing the story before doing the math is probably the simplest way to put it. I look at financial planning, as far as the numbers side, as gathering a story of numbers, but preceding that is a biographical task, which is gathering a number of stories. If I was going to juxtapose the two sides, it’s a left brain/right brain
equation.
What struck me in my first exposure to financial planning functions—and this goes back about 16 or 17 years—was the lack of context in terms of the story that was gathered before doing the math, because all those numbers have a story to tell.
I remember meeting an accountant at an FPA meeting who told me that he would take a 1040 and sit down with a client and point to any number on the
1040 and say, “tell me the story behind that number,” which I thought was really, really rich.
Ultimately, this is about people’s lives, right? In the early days, there were a lot of people who just wanted to isolate themselves in the numbers function without really, truly understanding the context of what they were addressing. I remember guys coming up to me after FPA meetings and saying, “Hey, I’m a numbers guy. I don’t need all this stuff.” I think those people are becoming
dinosaurs.
I was just really examining what this industry called discovery processes, and I found out that they were wanting. The ultimate question that needs to get answered is: what is the money for? For some people, the answer’s too soft. I’ve been saying for years that the soft stuff is the hard stuff. Having a skillset where you can draw out what it is people really want from their money is going to take into account the people they love, the places they love, and the things they love to do. If you’re not comfortable with that conversation, then you better have someone on your team who is.
2. You’ve been working with some of the leading financial planning schools in the country to ensure that the next generation of planners learn a life-centered approach to planning. Can you tell us about these efforts so far and what’s planned for the future?
I can’t speak to what each school is using or doing, but I can speak to what I’ve made available to schools. It all started with Texas Tech years ago. Deena [Katz] and Harold [Evensky] have been friends of mine for a long time, and I gave the school the financial life planning software I’ve developed, and some of the professors there utilize that software in training students in this more holistic discovery process.
Our relationship with Texas Tech goes a little bit deeper in that we give a scholarship each year called the Gene Lawrence Big Heart Award for a student who demonstrates concern for the community and helping others, and that scholarship helps pay for the CFP® exam. Gene Lawrence was my original architect of the financial life planning software. He was the first person who
came to me and said, “For this to really be entrenched in the financial planning industry, you’re going to need a web-based software.” Gene passed away 10 years ago at a really young age, so we established that scholarship in his name.
Then we offered [the software] to the University of Georgia, Utah Valley State, and I know a professor at William Paterson was teaching it there. We’ve got a number of schools in Canada that are utilizing various aspects of the software, and some of my books work as texts for some of these courses. So, we make our software available to financial planning schools. It’s a long-standing offer, and it’s still open to any financial planning school that wants to help their students along these lines. We’ll give them the resources they need to do it.
3. In your experience working with planners, what do you find is the one thing they could do to improve the effectiveness of their communication with clients?
I can’t give you a silver bullet, but I can say this: I think it’s incredibly important to stay in touch with the changes that are happening and the nuances that are happening in clients’ lives on sometimes a monthly, quarterly, or yearly basis.
It’s a myth to believe that discovery’s an upfront process. Things change, and so often planners assume that life is static. If you ask them if life is static, they’ll say
no, but their process assumes that it is. Something’s always changing; that’s why for years I’ve been pushing this
process called the life transition profile. I’m in the process of creat
