Purpose. The Engine that Drives Us
By Jon M. Duncan, CFP®
The term personal financial planning may mean different things to different people. The term has been broadly and loosely applied to a wide range of advisory services and financial product sales efforts. It also has several somewhat clinical definitions that have evolved primarily through the efforts of financial planning organizations to foster a unified PFP profession. The AICPA Statement on Standards in Personal Financial Planning Services, for example, defines personal financial planning services as: The process of identifying personal financial goals and resources, designing financial strategies, and making personalized recommendations that, when implemented, assist the client in achieving these goals.
Similarly, but with more emphasis on the importance of periodic review and monitoring, The Financial Planning Association (FPA) defines financial planning as: Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product.
Each of these definitions of financial planning wisely emphasizes process. While they are good and accurate definitions, however, they are not sufficient. Both definitions fail to address the same important, underlying question: Purpose. Like other endeavors in life, financial planning is not likely to be truly effective, nor is it likely to achieve the desired outcome, unless it is undertaken intentionally, with purpose.
Purpose is the engine that drives all worthwhile endeavors in life; it is what motivates us. Without a purpose in life most of us would aimlessly wander down the path of least resistance, letting our purpose be defined for us by fate rather than defining our purpose on purpose. In the realm of financial planning, purpose makes the difference between a plan that is implemented and one that is left unimplemented. Why? Because without connecting your heart to your plan you’re not likely to have the motivation to do the hard work needed to implement your plan.
Many people confuse purpose with objectives. For example, they might say the purpose of planning is to retire and be financially independent. While retiring financially independent is a good example of a planning objective, it is not a very good example of purpose. To get to your purpose requires holding your objectives up for some difficult and challenging questions: Why is retiring financially independent important to me? What is it that achieving this objective will allow me to do that I otherwise would not be able to do?
Clarifying and articulating your long-term financial goals is imperative. The beginning point for financial planning, however, if it is to be meaningful and result in achieving your goals is asking deeper, more existential kinds of questions: Who am I? What is important to me? What are my core values? What does what I do with my money reflect my priorities? These are the questions that, if answered first, form a solid foundation on which a good financial plan – one that is more likely to be implemented – can be built.
Seneschal Advisors, LLC is a comprehensive wealth management advisory located in University Place, Washington. Our mission is to reconnect money and purpose by providing clients with the objective, unbiased financial advice they deserve and need to achieve their most important life goals. If you would like to experience our approach to wealth management, please visit us at firstname.lastname@example.org for a complimentary Retirement Planning Guide or call 253-460-3430 to schedule time for a no-obligation initial consultation.
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