Cookie Cutter Financial Planning? – Not US

December 16th, 2020 by Jim Allen

There are a lot of firms these days that say they do financial planning. They call themselves wealth managers, investment advisors, financial advisors or financial planners. You see their commercials on TV and their ads on the internet and in magazines. Typically, the ad shows a couple walking on the beach or sitting in hammocks at their cabin enjoying their retirement.  These firms usually talk about helping you meet your goals by providing investment management solutions.

Here is the problem with this approach – they expect you to provide the information about your goals so that they can “plug” them into their automated planning programs and spit out a “plan” and a portfolio model. They also expect you to tell them when you are planning on retiring, and with how much money so they can figure out how much you need to earn in investment return to get you to that number. It is all very cookie-cutter and generic, and every client is looked at as the same.

What we have seen in our 30+ years of experience is that many people don’t know what their goals are, let alone being able to put dollar amounts to those goals. Exploring a client’s vision of what retirement can be is a missed first step when working with those large financial planning “factories”.

The other reality is that goals will likely change multiple times over a person’s lifetime. For instance:

  • A client may pick age 65 as a retirement date because that is what they have been programmed to think of as the retirement age. But what if you like what you are doing and want to work longer? Or you want to change careers and do something totally different? These goal changes will change that retirement equation in major ways.

The other problem with defining a goal and sticking with it, is there are going to be life changes that might impact that goal.  For instance:

  • There are going to be job eliminations, health events, divorces, deaths and other things that will change the arc of your financial plan.
  • All of this must be incorporated into the planning that is done and usually doesn’t fit into those cookie cutter plans.
  • Much of the time, that “financial plan” that is developed is useless within a year or two. This is the reason that we provide ongoing financial planning services rather than one-time financial plans.

Getting back to goals, the way we typically work is to do possibility planning rather than goal planning:

  • We take into account all of the possible transition events that may occur plus varying visions of retirement and develop several different paths for the client to consider.
  • Once the initial planning is developed, it has to be constantly adjusted to reflect changes in the client’s situation as well as changing needs and desires.
  • This can only be done by treating each client as an individual case and customizing the advice to their individual needs and circumstances.

Whether it is financial planning, tax advice or investment management, everything is customized for our clients and nothing we do at Anchor Bay Capital is cookie cutter – ever!

Jim Allen, CFP, ChFC, CDFA is the Director of Financial Planning and a Principal at Anchor Bay Capital. In addition to his 30 years of financial planning experience and his professional credentials, he holds a master’s degree in Financial Planning and is a former instructor in the CFP program at the University of California Irvine. He is also the co-author of the book “The Tools & Techniques of Charitable Planning.” Jim can be reached at [email protected]