My smartphone has slowly and imperceptibly become an integrated tool of my everyday life. Perhaps you’ve noticed the same. It slices, it dices and makes Julienne fries. What a wonderful time to be alive. In fact, when my smartphone becomes disabled or goes to the fix-it shop for a new screen I feel adrift in space, untethered from reality.
From time to time, my smartphone let’s me know that it’s time for a software update. Back at headquarters, the programmers and engineers are discovering holes that need to be plugged. They want to make my phone safer, faster and more stable. Additionally, they keep coming up with new, cool ideas to make my smartphone more user-friendly and in step with how I use my phone. For example, I used to unlock my phone with a four-digit code. Then I used my fingerprint. Now my face can unlock my phone, even with my Cool-Hand Luke sunglasses on.
Agility over Perfection
One of the reasons, the smartphone is taking over my life is because of a philosophy of software engineering. In the old days, you would buy a word processing program. There would be 25 floppy disks and you would load the entire thing on to your computer over the course of a day. All the bells and whistles were installed, whether you wanted them or not. A year or so later, that same company would have a brand-new word-processing program that would need less disks and less time to install.
And then, software engineers found a better way. Using the connectivity of the internet, a program can be downloaded as needed. Furthermore, that program can be improved on the fly. Security patch updates? No problem. New functionality and faster execution? Just click right here. The result is that software engineers are quick to get new software out there. They produce an application that is viable now, because they know they can perfect it later based on feedback from users in real time.
Planning over Piles of Paper
That’s how financial planning should be. Create a viable financial plan now, knowing that you will perfect it later based on feedback from life as it happens.
Unfortunately, traditional financial planning has followed the old software model for far too long. Retirees dread the idea of filling out reams of questionnaires and gathering piles of paper that detail the minutiae of their financial lives. And what do they get in return? More paper. The data they provided is then regurgitated in 57 pages of templates answering questions the client never asked. This pile of paper, handsomely bound and emblazoned with logos, is put on the shelf until next year when the financial planner updates it. Sounds like financial planning needs an upgrade.
For years, I’ve tried to find an analogy to my approach to financial planning. And it’s simply to create a viable financial plan now, knowing that you will perfect it later based on feedback from life as it happens. In the information age, you don’t need to pay for template documents on how a Roth conversion may apply in 20 years. What you need are a list of priorities and commitment to align your behavior towards those priorities. Put another way, your planner should be able to describe your financial plan on one sheet of paper in a way that makes sense to you.
Keep in mind, life happens. The market crashes. The market soars. Congress changes the tax law. Your crazy aunt leaves you an inheritance. You lose your job. Your youngest child gets a full scholarship to Harvard. At each turn, your financial plan needs an upgrade.
11 Most Read IRIS Articles of the Week!
Building Authority in Places You Don’t Own
How to Play Interest Rates in Real Estate
Why Story Will Always Beat Statistics
3 Simple Steps for Financial Advisors to Embrace Social Media
Superpowering Your Customer Experience by Trusting Your People
5 Ways to Avoid Getting Left Behind in Tomorrow’s Sales World
When to Bring Your Children into Your Finances
5 Valuable Tips to Grow Your Business
Equities1 day ago
How to Play Interest Rates in Real Estate
Building Smarter Portfolios2 days ago
Late Cycle Investing?
Advisor Marketing2 days ago
What Financial Advisors Should Do Before, During, and After a Conference
High-Conviction Investing2 days ago
Why Today’s Inverted Yield Curve Isn’t Necessarily a Recession Warning
Development2 days ago
6 Important Advisor Growth Systems for Success
Permission to Succeed3 days ago
The Biggest Markets You’ve Probably Never Heard Of
Global3 days ago
Protecting Wealth Against the Law of Unintended Consequences
Insights3 days ago
What Companies Wealthy Investors Prefer to Invest In