I heard a radio commercial this morning for a large mutual fund company who staff in-house representatives to help clients develop financial plans. I won’t quote the tagline but it sounded very similar to virtually every other financial planning firm extolling their prowess at helping clients achieve future financial goals. Basically, the ad focused on how great your future could be if you use their goal-focused planning.
I do something similar for a living and I won’t knock the value of long-range planning or criticize peers for advertising long-range planning services. But I’m going to pick on one element of my industry that I don’t like. One of the easiest ways to do this job is to present a proposal for a 25-year investment plan, charge an annual asset-management fee, send quarterly newsletters, monitor progress on an annual basis, send more newsletters, and have absolutely no accountability for the quality of the plan until 25 years has gone by! I have rubbed elbows with financial advisors who have made careers writing and managing long-term plans with no focus whatsoever on helping someone with their current financial situation, their current level of happiness, or their current pursuit of positive life experiences.
A predictor of your future financial happiness is not how well your current investments are tracking against the plan someone wrote 10 years ago (where they probably assumed an annual investment return of 10% - look up one of your old financial plans to see what I mean!). Instead, a better predictor of your future financial happiness is your happiness today and the financial habits you are creating today that specifically target how you want to live.
There are too many people who get done with their 25-year investment plan only to say how surprised they are that things didn’t work out as they thought they would. There are too many people who sacrificed their money, time, and emotional happiness for decades all for the belief that retirement was going to be awesome, only to die or get sick not long after quitting work. There are too many people who find no added joy in retirement because they never made it a habit of pursuing joy before they retired.
The solution is not to stop long-range planning. The solution is to be sure that you somehow tie your long-term goals to immediate behaviors and accomplishments which support a happier, more intentional way of living. Like most things in life, if you are always planning and not currently pursuing and experiencing, you’re not likely to ever realize any of the things you want in the future.
