The Elements of a Plan: As a follow-up to our last video on what Open World's process is like, Ian goes over the elements of any financial plan. These three things (and a bonus) can actually be applied to most plans and goals in life, but they are especially relevant when working on a financial plan.
What's up, Internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd. In today's episode, we are going to be talking about the elements of a financial plan. And I'm going to break this down pretty simply because I think that people over-complicate their finances a lot.
The elements of a financial plan, at their core, come down to three things. One is an understanding of where you are today and where you would like to be in the future. It's somewhat hard to get an understanding of this, however. A lot of people aren't aware of what they're spending, how much they've invested, what they're saving, and those sorts of things. So that's where the work that I do often comes in is helping people diagnose where exactly they are today, and then focus on what is exciting to them. The future can hold a lot of different things. And you can either have the future that you want or the one that happens to you by accident. So deciding what it is you want and making steps towards that, first step of a financial plan.
The second element of a financial plan is the analysis that a financial planner will do. You see, software has evolved to do some pretty incredible things. With financial planning software, I'm able to project out 30, 40, 50, 60 years of a client's life based on their current financial decisions and continuing those, and tell them how much money they will not only be earning or saving, but also how that will grow their net worth over time. So it's important to remember, much like the opportunity cost video we did last year, that every decision will ultimately have an impact on your financial plan. Going to get that latte, despite what the media would have you believe, is actually a relatively small decision. That latte purchase will not change your financial future. However, where the media does have some good points is that the cumulative effect of a lot of these small decisions can have a big impact on that analysis. Because if you were to save $100 more a month over 30, 40, 50 years, that could compound to a heck of a lot of money and savings.
Now, the final element of the financial plan is the recommendations. The recommendations are determined by the financial planner as a result of the work that you did in step one, deciding where you are today and where you would like to be in the future and the analysis. Basically, the financial planner's job is to tell you what the steps are that the analysis recommends to get you from where you are to where you want to be. It's kind of that simple.
But here's the bonus step. The recommendations are useful. They certainly are, but the bonus step that's most useful is actually implementing them. A lot of financial planners do not implement with their clients, and that's something that we do differently here at Open World. I spend time implementing with all of my clients. And what I mean by that is, is if it tells you to save $100 more a month, I think it's the financial planner's job to help you set up $100 more a month in savings, whether that means finding it in your budget or physically going onto the website with you and helping you select transfer $100 from my checking account to my savings account.
You see, all of these things are very important. But ultimately, making the changes based on all this analysis and recommendations is what's actually going to change the outcome. Action is more important than knowledge on some level. Knowing and having informed action is the best result, but doing things is ultimately going to be required to change your financial outcomes.
If you did enjoy this video, please like, comment, subscribe, do something to let me know that you were here. And then if you are interested in seeing what a financial plan would look like for you, feel free to head over to my website at openworldfp.com and check out the services that we offer there. I am more than interested in working with other nerds who would like to make financial progress.
Imagine knowing nothing of a career, not even dreaming it would exist, and then standing on its most sacred ground five years later. It’s awe-inspiring. Hana is the epicenter of life planning, brought into existence by George Kinder. With the goal of connecting the mental side of money with the meaning that we are looking for in our lives, life planning is an incredible way to work with clients. The following blog post and two more to come will be focused on my Journey to Hana, my Journey in Hana, and my Journey Home which I hope will ultimately convey some of the substance of life planning itself and not bore you to death.
My journey as a financial life planner began in college. I was a psychology major at Appalachian State University. And like many other juniors, I was sitting through the “Careers in Psychology” course all too late. My mind had been made up until this point - I was going to be a therapist. I wanted to help adolescents sort their ways through the difficulties that I’d experienced in middle and high school. I saw the same problems that were increasingly prominent in my generation - increases in anxiety and depression. It was my inclination that my place to help was in that painful transition of puberty.
Until the reality of five more years of school was shown to me.
A Ph.D. is an incredible thing to have, but I no longer wanted one. I wanted to make a difference sooner. Five years is a long time to sit in a classroom not helping people, and I’ve always been more of an action-focused person (sometimes to a fault.) The reality of how few options I actually had was paralyzing. What can I do with a bachelor’s in psychology?
Like all good stories, mine does involve a partner. My wonderful wife Rebecca and I began dating that same semester. From the first few weeks we began dating, I remember remarking on how simple our relationship felt. The communication was easy, and we both enjoyed each other’s company. She even liked that I was a nerd!
During my time of crisis, she took me home to meet her parents. On that trip I met the second person in the Brody family that would change my life, Steve. Steve and I met in the same uneasy way most fathers and boyfriends meet, but I do remember feeling a lot of warmth from him immediately.
Rebecca and her mother left the house that evening for something, which left Steve and I calmly sitting in the living room. We were watching some show I wasn’t particularly interested in, but I was happy to just be sitting there. I’m sure we were talking casually, but I don’t remember much until the question came. “So...what’s your degree in? What are you going to do when you graduate?” What are you going to do to take care of my daughter?
I have no fucking clue. “I...uh...honestly don’t know, sir…” And I elaborated, as I always do. I’m a long-winded talker when I’m in an interesting conversation. I explained my current nervousness about the future and my lack of direction, a feeling I was unfamiliar with.
“Well...why don’t we go to my office tomorrow and talk about that?” He replied, calmly.
I had little idea what he meant by that. Rebecca had told me her Dad was a financial planner though, so it wasn’t altogether weird for him to want to chat about it and give me advice. It was a little odd that it was on a Saturday we’d be going to his office...alone…
Reader, I don’t know if you’re from the South, but where I live there are a lot of half-jokes told about protective fathers and shotguns. I believed he was intelligent enough to hide a body, too.
But what actually happened that Saturday morning is Steve showed me life planning. He showed me the future. He gave me a window into something that I would be good at, something that would help others, and something I loved. He changed my life. It all started with the question “What’s important to you?”
After a winding road to graduation, a boring sales job, and a lot of begging, I became his understudy. I was put through a crucible of his mentorship. License-getting in record time, mock client meetings, learning the processes, listening with intention, and hours upon hours of driving down a long, empty highway in the mornings and evenings. It all paid off though. I was thriving and learning, which was something I was very good at.
After six months of preparation, I started running my own client meetings. He wouldn’t let me do them alone of course, but if I booked appointments he made sure he was available to sit in on them. He would take tons of notes! The clients thought the notes were about them and the substance of the meeting, but they were really about all the things I could improve. We would spend as much as an hour reviewing after each meeting. And man, did I get better quickly.
Just over a year later, I was winning awards within the larger region for our company. I was blowing my competition out of the water...in sales. With my clients, I was constantly learning how to meet more and more of their needs and deepen the relationships. Oddly, the two always seemed related. Do the right thing and the money will follow.
It all changed when the fire nation attacked. Corporate consolidation, I mean. The large insurance company we worked for decided that it was no longer doing business with individuals, so we were given short notice that we’d be moving firms. A year and a half into my career and I was already on the move. The new company made a lot of promises. Almost none held up.
My motivation waned. Around the same time we were moved, a lot of the things that had been joyous and business-driving at the previous firm started to dry up. We used to teach these wonderful courses for employees at large tech companies, for instance. Those were gone. The inefficiencies of the transition and inept movements of management cost us. Steve and Eric, the other member of our team, had less need of me. As a result, I lost quite a bit of enthusiasm.
During this time I slowly moved through my CFP® education and tried to go deeper with my clients. My “numbers” weren’t stellar on the product side, but my fees for planning were going up dramatically. Even with the few clients I had in those days, I was making a decent amount and feeling very fulfilled in that role. That said, pressure from the office and structure of the company weren’t far from view at any moment over my 18 months with this new firm.
There was an incident that made me leave. I distinctly remember a conversation with my sales manager that went something like this.
“So, let’s talk about your numbers.”
“Well, sir, sure! It’s only the end of the first quarter, and I have $25,000 in planning fees already. I’m pretty happy with those numbers. Financial planning seems to be paying off.”
“Congratulations. I’m really happy for you...that said...because you haven’t sold any insurance yet, we’re going to have to put you in the Sales Starter class. The GA is worried you won’t make contract by the end of the year at this rate. Insurance pays the bills around here, you know that.”
What about the $5,000 that you took out of my fees?
And so I left. The situation was untenable. They wanted me to sell insurance, and I wanted to do what was right for my clients. A few months later I launched a firm with XY Planning Network. Granted, the transition was not as smooth as I would have liked, but the industry is set up that way. It’s remarkably hard to give a two-week notice in the financial services industry.
My new firm Open World Financial Life Planning was about serving my people, nerds, better. Life is in the title on purpose. I had been practicing a form of proto-Life Planning the entire time, and I intended to grow more into that. The first step was finishing my CFP® certification, which I did within six months. Then I focused on growing from the five clients I brought with me to something more sustainable.
There was stress in that, as you might imagine. I was grateful for my five clients, but I’d lost about that many in the transition in some form. That meant that income was quite a bit lower than I’d imagined. Anxiety about money and building a business are really one and the same, however. I’ll be writing a blog post about that soon too.
Then a big reminder about Life Planning slapped me in the face - XY announced that they would have George Kinder himself hosting a 2-Day workshop at the annual conference. I knew I had to be there. Revenue was still tight, so an extra thousand dollars wasn’t that appealing, but to go any other time would be much more. And it was very worth it.
At the 2-day I was introduced to the EVOKE methodology by George himself. George is someone who commands a room not with a booming voice, but with a bold smile and a calmness that is almost palpable. That said, the calmness doesn’t mean he doesn’t work. We were in the 2-Day workshop for about 12 hours each day. The work is largely introspective, focusing on an understanding of your own money stories and ideal future so that you can see the same in clients.
Then came the end of the two days, where George life plans a member of the class. In the middle of the room, in front of 70 others, I watched a colleague well up with tears at the vision of his ideal future. George painted a wonderful picture with his words, showing my colleague just how simple and clear it could be. I would later come to realize that is the essence of life planning, it’s not magic, it’s just putting exactly what your client wants in full view and clearing the roadblocks in their mind. But, as another colleague of mine described it “Watching George work in the 2-Day was amazing and humbling. How am I going to do that?”
It was like seeing my future. I wanted to do that with clients, and moreover, I wanted to help spread the word that it could be done for clients.
I left the workshop feeling determined. I was going to practice my own life planning and find a way to make it to the 5-Day soon. I knew it couldn’t be right away...I just don’t have the money. I need to develop the practice. I wish I could, I mean...this one’s going to be all XY people...
I got a text from my wife the next day, after recapping all of the feelings and sentiment with her, that said: “My dad said he’ll pay for us to go to the 5-Day in Hawaii in January. He wants us to get life planned together.” I called her immediately, trying not to cry. “A-Are you serious?”
Given that this post is about life planning, I’d be a hypocrite not to admit that I have trouble accepting help financially. I was given a sort of “Life Start Fund” by my parents, and sometimes it feels like accepting help beyond that is just too much privilege for me to stomach. That said, this was important enough that I overcame that reflex of mine in favor of what I knew I needed to be doing.
So we booked our trip to Hana, and set off on a journey I will never forget.
The Planning Process at Open World: Ian walks through the six steps in the Open World Financial Life Planning process.
What's up, Internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd. In today's episode, we are going to be talking about our process here at Open World Financial Life Planning. The important part about this is that I wanted to get something together so that you could see what it looks like to work with us. I've already made a video, which you can find over here, about what it's like to schedule a meeting.
But what happens when you decide you want to move forward? The first part of our process is called Discovery. And Discovery is focused entirely on learning more about you and what your main and side quests are. It's going to be a conversation about where you are today and where you'd like to be in the future, and exactly what paths are important to you to take to get there.
The next part of the process is called Input. And Input is all about gathering the data. It's all the nerdy finance stuff that I have to do in order to give you good recommendations, like gather bank statements, and get tax returns so that I can get the exact numbers that are important for your financial plan. If you become a client, I'm your fiduciary, so I have to make recommendations that are in your best interest. And as a result, it's really important for me to get accurate data during input.
The next part of the process is Design. Design is putting together your financial plan draft together. It's collaborative. The goal is to compare the different paths from where you are today to where you want to be in the future and decide which one of those paths is the exact one that you want to take.
The next part is Delivery. Once we've finalized a financial plan, I'll sit down and review it with you. There's going to be about 20 to 30 pages of analysis accompanying a one-page checklist that's going to have all the things in it that you need to do, in order to make your financial plan a reality.
The next part is Implementation. Implementation is important because it's us actually doing the actions that are important to your financial plan. We will do them together. We won't move forward with any step without you understanding exactly what we're doing and why we're doing it, because again, this is your financial life. We want you to have exactly what you want and we want it to be actionable. We don't want it to be some sort of academic exercise. So we'll work through it together and find the implementation that works best for you.
Finally, at the end of the year, we'll do a Review process. We'll sit down in a meeting and talk about what we've gotten done over the past period of time, usually a year, and where we want to go from here. For some clients, working with us for a year is exactly what it takes to get them set up to move forward on their own. For other clients, they enjoy having us in their life on an ongoing basis because, frankly, having a partner and somebody to keep you accountable to the things you said you want is often nice for folks. But either way, that's kind of the end of our one year process.
You'll notice that this process is designed as a circle, and that's because for those clients that want us in their life on an ongoing basis, we don't really start over from square one, but we do revisit all six steps of the process every year, because the goal is to make sure that you are making the financial progress that you want. And we think these six steps are a really good way to do that.
Thanks so much for watching. I hope this video was interesting to you. If you have any questions about this video, make sure to go to our website and look over more details about our process. There's a nice graphic that was broken up into chunks for this video there. If you're interested in hiring a financial life planner, we would love the opportunity to sit down with you to get to know you better and potentially work with you in the future. Thanks so much. Have a wonderful day.