Financial planning is much more personal than it is financial but that doesn’t keep investors from seeking exactitude and precision. I read a quote recently that said “life is what happens to us while we are making other plans.” So true. Financial planning is dynamic and should primarily be focused on changing the trajectory so that real life goals come into better focus.

When we started out in the 1980s, planning was aimed mostly at investments, insurance and forecasting retirement cash flows. I recall a new client coming in during that period and he showed me his current financial plan prepared by another planner. It was complete with literally hundreds of pages of data and projections. I told him it was worth about the cost of the paper and the binder because of changes in his circumstances.

Precision Doesn’t Work in the Face of Change

As the computer age came into being, many financial planners leaned even more heavily on precision using software programs that could run numbers until your heart’s content. We have never put much credence in trying to project exact outcomes 20, 30 or 40 years into the future. Far too many variables to make this reasonable.

Instead, we aim to change behavior to align with stated goals. Remember this: it is impossible to “prove,” in the math sense, an exact forecast for the future. Things change and that’s why financial planning needs to be comprehensive and continuous.

The essence of financial planning is to bring what you want for tomorrow into some action today. That’s the way to actually solve the key concerns and issues that confront successful individuals. How to fund college for the kids, while saving for retirement and caring for aging parents. Financial planning questions like these can’t be solved by spreadsheets and charts but instead require discipline and ongoing monitoring. Ready for a real conversation?

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