Comments on: Financial Plans are a JOKE http://www.behaviorgap.com/financial-plans-are-a-joke/ Exploring the relationship between people and their money. Tue, 09 Mar 2010 06:52:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Staying in the game Abnormal Returns http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-761 Staying in the game Abnormal Returns Tue, 13 Oct 2009 18:53:47 +0000 http://www.behaviorgap.com/?p=1341#comment-761 [...] approach.  What investors likely need over the long run is flexibility. Carl Richards at behavior gap maybe puts it best by noting our need to  “course correct” over time. We place way too [...] [...] approach.  What investors likely need over the long run is flexibility. Carl Richards at behavior gap maybe puts it best by noting our need to  “course correct” over time. We place way too [...]

]]> By: Kristin Harad http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-886 Kristin Harad Fri, 09 Oct 2009 23:53:06 +0000 http://www.behaviorgap.com/?p=1341#comment-886 I totally agree. A plan is no good unless it is ACTIONABLE. It does no good to know where your money should go, unless you actually DO something about it. A plan is a noun and can collect dust. Planning implies ACTION. Money generally doesn't save itself, or funnel itself into the appropriate account. I totally agree. A plan is no good unless it is ACTIONABLE. It does no good to know where your money should go, unless you actually DO something about it. A plan is a noun and can collect dust. Planning implies ACTION. Money generally doesn't save itself, or funnel itself into the appropriate account.

]]> By: evolutionofwealth http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-885 evolutionofwealth Fri, 09 Oct 2009 23:36:18 +0000 http://www.behaviorgap.com/?p=1341#comment-885 I love the heading and the post. The comments are starting to get better than the post though. I love the idea and concept that you are bringing out. The generic financial plan I think is a complete failure. It gets people believing in unrealistic goals and expectations. You said it yourself in the comments, that the best planners you know are yellow pad planners. I'm guessing that they are up front with their clients instead of throwing a stack of papers in front of them. I see so many planners pile assumptions and predictions in front of people that are based on misinformation. If more planners were up front and set the proper expectations of charting a course or using the analogies that have been mentioned here, not only would we have more financially successful people but you would have a foundation on which to build a solid industry on. Instead we are left with the bad reputation so many financial people have earned. I love the heading and the post. The comments are starting to get better than the post though. I love the idea and concept that you are bringing out. The generic financial plan I think is a complete failure. It gets people believing in unrealistic goals and expectations. You said it yourself in the comments, that the best planners you know are yellow pad planners. I'm guessing that they are up front with their clients instead of throwing a stack of papers in front of them. I see so many planners pile assumptions and predictions in front of people that are based on misinformation. If more planners were up front and set the proper expectations of charting a course or using the analogies that have been mentioned here, not only would we have more financially successful people but you would have a foundation on which to build a solid industry on. Instead we are left with the bad reputation so many financial people have earned.

]]> By: RobBennett http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-884 RobBennett Fri, 09 Oct 2009 21:44:32 +0000 http://www.behaviorgap.com/?p=1341#comment-884 Since we have been in disagreement on a number of other points, I wanted to take 10 seconds here to say that I very much agree with your take re this one, Dylan.<br><br>Rob Since we have been in disagreement on a number of other points, I wanted to take 10 seconds here to say that I very much agree with your take re this one, Dylan.

Rob

]]> By: Dylan http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-883 Dylan Fri, 09 Oct 2009 21:29:07 +0000 http://www.behaviorgap.com/?p=1341#comment-883 Carl, I don't think being sure of a destination is a requirement. Even with "lets get up in the air a bit and see what the conditions are and then adjust..." you pick usually a direction to start in. Why did you pick that direction? Maybe a client does not know when or if they want to stop working, or how much they'll need in retirement. <br><br>We can still make some important decisions today about how much to save or how much to allocate to stock market investments by picking a point and heading for it. But that point does not have to be arbitrary. By establishing some parameters around vague goals, we can find a point that will help us move in the right direction and yet allow us to appropriately deviate when the destination become more clear. <br><br>Let's say a client does not know how much they need to support their retirement lifestyle, they may be able to constrain or define a reasonable range such as it will be at least X but probably less than Z. Knowing that and other information about a clients priorities, we can find a point, Y, to aim for and make other necessary decisions today. Y is just a placeholder, and it's subject to change. But it's probably reasonable enough to get moving in the right direction. Therefore, when the destination picture become more clear, we're less likely to have to tell the client they must double their savings rate or something else drastic.<br><br>Christopher Columbus didn't know exactly where he was going but had an idea of what he was looking for, enough of an idea to know he had to sail west. Carl, I don't think being sure of a destination is a requirement. Even with “lets get up in the air a bit and see what the conditions are and then adjust…” you pick usually a direction to start in. Why did you pick that direction? Maybe a client does not know when or if they want to stop working, or how much they'll need in retirement.

We can still make some important decisions today about how much to save or how much to allocate to stock market investments by picking a point and heading for it. But that point does not have to be arbitrary. By establishing some parameters around vague goals, we can find a point that will help us move in the right direction and yet allow us to appropriately deviate when the destination become more clear.

Let's say a client does not know how much they need to support their retirement lifestyle, they may be able to constrain or define a reasonable range such as it will be at least X but probably less than Z. Knowing that and other information about a clients priorities, we can find a point, Y, to aim for and make other necessary decisions today. Y is just a placeholder, and it's subject to change. But it's probably reasonable enough to get moving in the right direction. Therefore, when the destination picture become more clear, we're less likely to have to tell the client they must double their savings rate or something else drastic.

Christopher Columbus didn't know exactly where he was going but had an idea of what he was looking for, enough of an idea to know he had to sail west.

]]> By: Carl Richards http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-882 Carl Richards Fri, 09 Oct 2009 19:47:49 +0000 http://www.behaviorgap.com/?p=1341#comment-882 Thanks Jack.<br><br>Sometimes I wonder how much of the act of being a good "pilot" is experience [knowing the client, and the anticipating how they will react to changes in the landscape] vs. use of assumption software?<br><br>It seems that many of the best planners I know are yellow-pad planners. They just know that over time as they develop a deeper relationship the course will become more clear and don't push the client to make a bunch of unreasonable assumptions at the beginning...<br><br>Make sense?<br><br>I know you have to have a flight plan to even take off, but what is it was as simple as "lets get up in the air a bit and see what the conditions are and then adjust..." the problem with the flight plan analogy is that most the client I deal with are not sure of the destination to start with. Most people don't know where they are going to me 5 years from know let alone what retirement will look like... Thanks Jack.

Sometimes I wonder how much of the act of being a good “pilot” is experience [knowing the client, and the anticipating how they will react to changes in the landscape] vs. use of assumption software?

It seems that many of the best planners I know are yellow-pad planners. They just know that over time as they develop a deeper relationship the course will become more clear and don't push the client to make a bunch of unreasonable assumptions at the beginning…

Make sense?

I know you have to have a flight plan to even take off, but what is it was as simple as “lets get up in the air a bit and see what the conditions are and then adjust…” the problem with the flight plan analogy is that most the client I deal with are not sure of the destination to start with. Most people don't know where they are going to me 5 years from know let alone what retirement will look like…

]]> By: jackcalhoun http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-881 jackcalhoun Fri, 09 Oct 2009 18:50:20 +0000 http://www.behaviorgap.com/?p=1341#comment-881 Very provocative, Carl -- you know how to grab the idle surfer's attention!<br><br>The space shuttle analogy is a good one. Without a flight plan the shuttle can't even get started, but once it IS started the plan requires constant adjustment and correction. Same with financial plans; it is the act of going through the process that helps people get their priorities in order, develop goals and get a general sense of well being that they have a plan in place. But then it falls to the planner, who is the pilot, to keep the ship on the right path, factor in new developments, and be sure that where the client is heading is still where they want to be heading.<br><br>The investment industry has made financial plans a commodity, and I'm glad you're exposing that flaw for the investing public to see! Very provocative, Carl — you know how to grab the idle surfer's attention!

The space shuttle analogy is a good one. Without a flight plan the shuttle can't even get started, but once it IS started the plan requires constant adjustment and correction. Same with financial plans; it is the act of going through the process that helps people get their priorities in order, develop goals and get a general sense of well being that they have a plan in place. But then it falls to the planner, who is the pilot, to keep the ship on the right path, factor in new developments, and be sure that where the client is heading is still where they want to be heading.

The investment industry has made financial plans a commodity, and I'm glad you're exposing that flaw for the investing public to see!

]]> By: Kristin Harad http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-753 Kristin Harad Fri, 09 Oct 2009 16:53:06 +0000 http://www.behaviorgap.com/?p=1341#comment-753 I totally agree. A plan is no good unless it is ACTIONABLE. It does no good to know where your money should go, unless you actually DO something about it. A plan is a noun and can collect dust. Planning implies ACTION. Money generally doesn't save itself, or funnel itself into the appropriate account. I totally agree. A plan is no good unless it is ACTIONABLE. It does no good to know where your money should go, unless you actually DO something about it. A plan is a noun and can collect dust. Planning implies ACTION. Money generally doesn't save itself, or funnel itself into the appropriate account.

]]> By: evolutionofwealth http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-752 evolutionofwealth Fri, 09 Oct 2009 16:36:18 +0000 http://www.behaviorgap.com/?p=1341#comment-752 I love the heading and the post. The comments are starting to get better than the post though. I love the idea and concept that you are bringing out. The generic financial plan I think is a complete failure. It gets people believing in unrealistic goals and expectations. You said it yourself in the comments, that the best planners you know are yellow pad planners. I'm guessing that they are up front with their clients and let instead of throwing a stack of papers in front of them. I see so many planners pile assumptions and predictions in front of people that are based on misinformation. If more planners were up front and set the proper expectations of charting a course or using the analogies that have been mentioned here, not only would we have more financially successful people but you would have a foundation on which to build a solid industry on. Instead of the bad reputation so many financial people have earned. I love the heading and the post. The comments are starting to get better than the post though. I love the idea and concept that you are bringing out. The generic financial plan I think is a complete failure. It gets people believing in unrealistic goals and expectations. You said it yourself in the comments, that the best planners you know are yellow pad planners. I'm guessing that they are up front with their clients and let instead of throwing a stack of papers in front of them. I see so many planners pile assumptions and predictions in front of people that are based on misinformation. If more planners were up front and set the proper expectations of charting a course or using the analogies that have been mentioned here, not only would we have more financially successful people but you would have a foundation on which to build a solid industry on. Instead of the bad reputation so many financial people have earned.

]]> By: RobBennett http://www.behaviorgap.com/financial-plans-are-a-joke/comment-page-1/#comment-751 RobBennett Fri, 09 Oct 2009 14:44:32 +0000 http://www.behaviorgap.com/?p=1341#comment-751 Since we have been in disagreement on a number of other points, I wanted to take 10 seconds here to say that I very much agree with your take re this one, Dylan.<br><br>Rob Since we have been in disagreement on a number of other points, I wanted to take 10 seconds here to say that I very much agree with your take re this one, Dylan.

Rob

]]>