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Shining a Light on Client Dreams

Life planners pinpoint their clients' larger goals—repairing broken relationships with grown children, say, or becoming more involved in community activities—and then design a financial plan to make those desires a reality.

Richard Vodra, a financial advisor in McLean, Va., recently helped a client save for his life-long dream — a trip to Turkey to see the total eclipse of the sun in 2006. Nancy Langdon Jones, an advisor in Upland, Calif., found a way for an engineer to work part-time and still support himself while writing a book. Boston-based George Kinder helped an attorney cut back on his hours so he could spend more time with his family.

All these advisors practice a burgeoning new area of financial advice called life planning. Call it financial planning with a therapeutic edge — life planners help clients save for non-traditional and sometimes deeply personal goals. Pioneered about a decade ago by Kinder and Dick Wagner, former president of the Institute of Certified Financial Planners (now the Financial Planning Association), life planning could be the ultimate in value-added financial advisory service. Instead of just forging financial plans to help clients to save for retirement or college, advisors pinpoint larger life goals — repairing broken relationships with grown children, say — and then design a financial plan to make those dreams a reality.

“It's about finding out what the client really wants out of life and applying skills of financial planning to accomplishing those goals,” says Kinder, who is also a Buddhist instructor and lives part of the year in Hawaii. “These are things you can't talk to your pastor or therapist about.”

No one knows how many planners employ the method. But there are signs it's on an upswing. For two of the past three years, for example, Kinder has run two-day training sessions before the annual Financial Planning Association convention and about 110 planners have attended each session. At least three books on the subject have been published in the past five years.

Life planning has caught the eye of wirehouse execs, who are looking for ways to make relations with brokerage clients “stickier.” Today, Kinder says, most of the followers of his discipline are independent brokers or planners, but many wirehouses have approached him about conducting workshops in the past year. He says he can't divulge the names.

There are several approaches to life planning, but the most popular is in Kinder's Seven Stages of Modern Maturity (Delacorte Press, 1999, $13.95). The key is a series of three questions that start the life planning process with clients:

  • “If you had all the money you needed, what would you do with your life?”

  • “If you had only five to 10 years to live, what would your life look like?”

  • “If you knew you were going to die tomorrow, what would you most regret not doing?”

It's that last question that usually gets the most mileage. Sometimes, the answers relate to something creative, community-oriented or spiritual. More often, however, they pertain to family — I didn't spend enough time with my kids, for example, or I never patched things up with my mother.

Kinder cites the recent case of an attorney in his mid-40s. When faced with the ultimate question, the lawyer, who regularly worked 60- and 70-hour weeks, immediately said he regretted two things — not spending time with his children, aged seven and nine, and growing apart from his wife. A few sessions later, the client announced he'd worked out a deal with his employer to take on a more administrative role at the firm that would mean fewer hours and less income. He and Kinder went to work on his new budget (life planners spend considerably more time analyzing client budgets than the traditional advisor, according to Kinder), figuring out what to cut. Kinder saw that the client had been over-funding his retirement plans, and switched more money into taxable accounts with mutual funds.

The next stage is harder — keeping clients on target. It's one thing to pinpoint goals and find a financial road map to help get there. Staying the course is another matter entirely. Advisors often have to firmly remind clients of their decisions over a period of months and even years.

What's more, despite their best efforts, sometimes clients fall off the wagon — permanently. Six months ago, Vodra, the McLean-based planner with Legacy Advisors and author of Enough Money (Ex Libris, 2002, $20.99), cautioned a client against buying a lavish new house. The cost, he argued, would make it impossible for the man to follow through on his life plan, which involved quitting the corporate job he hated to find more satisfying but lower-paying work. A few months later, he bought the house anyway.

This kind of setback comes with the territory, warns Vodra. And, he adds, it's important to remember that life planning can't accomplish the impossible. “If you have two kids, you just might never be able to chuck it all,” he says.

The trickiest issues arise when couples start talking about their life goals. Husband and wife fill out separate questionnaires about their values and priorities. And, often one spouse's responses come as a surprise to the other partner. Before the planning proceeds, both clients have to feel comfortable with changes in lifestyle. Kinder recalls a couple who agreed to let the husband leave his regular line of work for two years, to give him the chance to write a book. But, before the first year passed, the wife was growing angrier and angrier. Eventually, Kinder managed to elicit the truth — she wanted to pursue her dream, too, and resented his new freedom. When the two years passed and he went back to work, she left her job to be a full-time mother.

Learning life-planning techniques can have a great payoff. A financial advisor who dispenses life advice will almost certainly have a tight relationship with his client — particularly if the advice pays off.

But there are downsides. You need a lot of patience. In the first year, sessions last a half hour to an hour longer than ordinary planning or advisory sessions. Figuring out how clients should pay can also be tricky. Life planners tend to charge hourly fees of $100 to $300, but in some cases include the service as part of a fee pegged to assets under management. In addition, it's probably prudent to educate yourself in life counseling, perhaps by taking one of the two- and six-day workshops Kinder offers.

In the end, life planning may not prove to be your cup of tea. But given its benefits, it's probably worth a look for most advisors.

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