Planning for All

I’ve argued at various times that financial planning cannot become a true profession until and unless it is available to everyone.  Virtually anyone can access an attorney (though some are court-appointed and paid for by the state), and most people can afford, through insurance or otherwise, to visit a doctor’s office.  But notice that both professions are far from egalitarian, in that they don’t provide equal access to the wealthy and non-wealthy.  I suspect that financial planning will have to come to a similar sort of compromise as we expand services to a broader section of America and the world.

Until recently, I had no idea what that would look like.  But Tanya Nichols, of Align Financial in Hermantown, MN, has spent a lot of time thinking about these issues.  She thinks that for the underserved middle market and below, we will need two things: a better way to describe the value of financial planning, and a plausible way for the financially unhealthy to get financial planning services without sitting down in front of a financial planner.

We can start with the value message.  Nichols proposes that we describe a professional relationship as similar to an insurance policy for some of a person’s most precious assets—some financial, and some just knowing that everything is being watched over, and peace of mind that if you get off-track toward your goals, there will be someone there to tap your shoulder.  The insurance policy might cost 1/2% of net worth, she says, plus 1% of income.  In addition to monitoring a person’s financial situation, there could be group coaching on financial wellness issues and education on navigating banks, credit cards and debt and the financial markets.

People who can’t afford this scaled-back solution would do what millions are already doing about their health.  They can’t hire a nutritionist or personal trainer to help with their personal well-being, but they can access health advice and information on the web.  If advisors are sending out similar types of advice to clients, they can also make it available on blogs that these less-wealthy people could access—raising financial literacy levels across the board.

I also expect corporations to hire financial planners right out of college as part of their employee benefits staff—which would make basic financial planning available to thousands of people who also have 401(k) retirement plans.  And there are companies like Fabric Wealth which are lowering the price point of planning services so that Middle America consumers will be able to afford them.

Beyond that, I often hear people lament the low level of financial literacy in the U.S., and point out that no financial planning coursework is offered in grade schools or high school.  But the same is true for medicine, and somehow people manage to navigate the healthcare world.  I suspect that the future Nichols envisions—people self-educating to raise their financial literacy level, and advisors contributing their best efforts to provide online advice and articles—will accomplish what we had hoped that some still-to-be-formulated high school curriculum would have accomplished.

If you add it all together, it is possible to envision a world where financial planning advice is not out of the reach of most people in America—and I would expect other countries to follow our example eventually.  The result might be what I envisioned in my book (The New Profession): a world where, whenever you see someone who is living a fulfilled and prosperous life, the first thing you would ask them is: who is your financial planner?

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