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One View on the Future of Financial Planning

The "father of life planning" applies his typically global viewpoint to our industry's future.

David J. Drucker, 01/22/2009

We all have our opinions, and we don't hesitate to opine on just about any subject. But some opinions are particularly insightful.

While pondering the future of the financial advisory industry, I decided to ask George Kinder what he thinks. Whether or not you use any "life planning" concepts or tools with your own clients, it would be difficult to dismiss Kinder's work as less than a major force in shaping the industry's best practices over the last decade.

As a foundation for his futurist views, Kinder notes three major past movements that must be acknowledged as part of the process of divining the future. Those industry accomplishments, says Kinder are, first, the 1970s movement toward the adoption of the CFP designation as a universal indicator of basic training, competency, and professionalism; the fee-only movement of the 1980s that is still influencing most advisors to move from commission to fee compensation; and life planning, which began in 1990s and continues to influence how independent advisors practice today.

"Of the three, the most institutionalized is the adoption of the CFP, but all three are critical when we look to the past as a guide to the future," Kinder said. "I've been all over the world [observing planners] and I think this structure is the same everywhere, with slight differences." The new advisory model that will emerge from this latest banking crisis and recession, he added, will bear global similarities.

This model--or organizational structure--will be much healthier for the industry than those we've seen in the past, Kinder said, and it will address four critical issues.

"First we have to look at how we can we be seen as a profession that--without question--has the highest reputation for integrity of any profession in the world," he said. "We deal with the whole life of the person or family we work with. When will we take this calling so seriously that we simply won't stand for anything but this reputation? We may all think we're doing a great, ethical job, but if the press and consumers and regulators don't see it that way, then we've still got a problem. Appearance and reality must be one."

The second issue is freedom. "What we've discovered in life planning is astonishing: we deliver to clients that final layer of freedom in their lives that they couldn't imagine occurring through financial planning. And, with that delivery comes a whole new understanding of the profession and its benefits to consumers." In concert with the second issue is the third issue--the realization that financial planning really is a relationship-based business. "You must have the necessary skills to create the highest-quality relationships," Kinder said. "In the past, advisors were trained in how to sell products. But the only sale we should be interested in now is the sale of freedom."

And the fourth issue is accessibility--or how do we deliver freedom to everyone? "The only person who has really addressed this thoughtfully is Sheryl Garrett (founder of the Garrett Planning Network, the mission of which is to train advisors in profitably serving the middle class). Without delivering freedom to everyone, we don't have integrity as a profession. We'll be viewed as elitist... as part of the problem, not the solution." And, he added, people will continue to question why we have former heads of Goldman Sachs (Henry Paulson) creating industry rules when these organizations are dedicated to sales. "We need an industry structure that reaches all the way down. We're on the verge of getting this, and it's a global undertaking."

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