Top blogs, business tips, and more!

Subscribe to our weekly newsletter:





What do you think?

How frequently are you faced with cross-border issues such as clients moving from one territory to the next, clients holding assets in other countries, etc.?

View Results

Loading ... Loading ...

 

Learn about certification in your territory

 

View blogs by territory

 

Learn about certification in another territory

CERTIFIED FINANCIAL PLANNER professionals may become certified to use the CFP Marks in more than one territory by obtaining CFP certification from the FPSB Member in the new territory. Those Individuals must abide by the certification renewal requirements of FPSB Members in both the home and new territories. Use the form below to determine what the across-border certification requirements are in your territory:


 

Welcome to the global gathering place for the financial planning profession
Financial Planner Blog

Financial Planning is More Than Numbers

Korean Financial Planning Professional Sunho KimBy Sunho Kim, CFP

An outsider would think that numbers are everything to financial planners. The number of clients they have and the size of their asset fund are examples of metrics for financial planners. Financial planners choose clients based on their income and assets. When they analyze financial information, they use forms of numbers called a statement of financial status and a statement of cash flows. The financial planning proposals they offer clients are mostly written in numbers. When a proposal is made for risk management in preparation for an unexpected death, detailed needs are analyzed, even if the level of death insurance may be calculated to several times the income.

In retirement planning, numbers reflected in multiple phases of the calculation process may be presented to the client. In almost all financial planning scopes, including investment planning, inheritance planning, tax planning, cash flow planning, and debt planning, numbers are omnipresent. If one feels dizzy over numbers, cannot partake in certain professions, especially not financial planning.

Nonetheless, the job of financial planning does not just deal with numbers. Planners must simultaneously analyze quantitative and qualitative information. Before a planner asks a client about their “numbers”, they need to know their life objectives, values, philosophy, experiences, priorities, and needs. They, in short, have to look at a clients’ life, behind the numbers. And yet, numbers play an important part.

Procrastinators, Pluckers, Plotters, and Probers

In his book, The Number: A Completely Different Way to Think About the Rest of Your Life,  Lee Eisenberg sorted out four personality types of Number chasers: Procrastinators, Pluckers, Plotters, and Probers. Procrastinators are in denial about the need for any kind of post-career plan; or they are otherwise lazy, confused, scared, or so woefully impoverished – so much so that it doesn’t matter if they have a plan or not. They hope for the best and dread the worst. Pluckers pick what seems like a good number out of thin air. Plotters possess well-developed left-brain capacity. They harvest, then crunch, a ton of available data to arrive at a rational, if incomplete, second-half number. Probers relentlessly pursue quests, journeys, and explorations into their inner being. Their goal is to figure out who they are, what they really want, and how much fulfillment actually costs.

Of these four personality types of number chasers, the plotters constitute the most idealistic clients for financial planners. If most of the work of financial planners deals with numbers and if clients can be classified into four number types, do numbers sum up everything about financial planning? BY NO MEANS.

Debt Repayment Strategies Depend on the Client

Let’s take a look at a financial planning for a client with a lot of debts. Some financial planners may suggest taking care of highest-interest-rate debts first. This would be the wisest and most effective approach for a client with discipline and strong will. But there are not many clients like that. If financial planners want to help them be aware of the benefits of debt repayment and acquire the habit of repayments, they may as well have them start with resolving the debt of the lowest balance, rather than the high-interest-rate one.

Seeing their debts eliminated gradually will help the client get motivated to accelerate the debt repayments. But some clients can be hard-pressed to continue with this process. In this case, they are advised to diversify disposable resources into debt repayments and savings-investments, albeit disadvantageous from the interest perspective. In doing so, they can witness a tangible result of asset growth occurring simultaneously with debt pay-backs, even though this may delay debt redemption and increase costs.

What About Psychological Burden?

In some cases, they may as well repay debts that are putting psychological pressure on them first, regardless of the interest rates and balances. For example, debts from a client’s friends or relatives with no interest might seem like an obvious thing to pay off last but considering the psychological burden they carry, a client might want to pay these back before anything else.

Financial planners have to deal with numbers in their practice, obviously, but they need to look past the numbers to their clients. In the movie, “The Guardian,” there is a dialogue between a retiring veteran, Ben, and his trainee-turned colleague, Jake:

“Before you go, please tell me one thing. How many have you rescued?”

“22.”

“22? Not 200?”

“22 I failed to save. That is the number that’s important to me.”

In summary, financial planners should provide clients with advice according to their personal philosophies vested in the numbers.

2 comments to Financial Planning is More Than Numbers

Leave a Reply

  

  

  

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>