What Constitutes the Art of Financial Planning: A Personal View

What Constitutes the Art of Financial Planning: A Personal View

September 01, 2020

My exposure to the art of financial planning goes back to 1958 in the Texas Panhandle. Although I recently celebrated my 43rd birthday, I belong to the 4th generation of my family to have called Perryton, Texas as its home. My grandparents Earl and Elmyra McGarraugh raised four sons on a farm north of Perryton, the youngest of them being my father. My grandfather passed away in 1989 and my grandmother celebrated her 101st birthday in February. 

In 1958 my grandfather met an insurance agent “Billy” who started a planning process that is still in place. At the time my grandfather had multiple term insurance policies with just as many different insurance companies. Apparently the best way to get a salesman to leave you alone is to give them a check. Billy was the first one to develop a plan and give a meaning to the products he sold. 

Giving meaning to an insurance or financial product is an art form. 

I first met Billy when I was about eleven years old. He and his son would drive a mobile home up to the panhandle and park it at my grandparent’s farm. They would hold a meeting with my grandparents, father and uncles to go over the plan. The meetings were always open and my father encouraged me to attend them. I am the youngest of nine grandchildren and the only one to consistently attend the meetings. I have no recollection of what was discussed at these meetings. However, I do remember the process, the feeling of importance, and the family gathering together to discuss their financial issues. 

Developing a strong positive relationship with three generations of a family is an art form.

When it was time for me to go to college I picked Business Finance as my major because I wanted to provide the same kind of financial planning service that was provided for my family. I spent four years studying finance and working for the University Dining Services. After graduation my only job prospect in finance was with the Texas Department of Banking. This was about as far away from working with families as it gets. My part time job with Dining services actually provided me with a better opportunity for salary, benefits and advancement. In that four year span I spent the bulk of my extra time developing meaningful relationships at work and very little time in my chosen field. 

This was the first time I realized that creating personal relationships is a key factor in advancing my employability in any given field. 

After a semester of floating around I finally discovered the Texas Tech Personal Financial Planning program. This program had the perfect pedigree for diving into the science of financial planning. I immediately applied to the Graduate School and enrolled in the Master of Science program. From the first day of class I knew I could not afford to make the same mistake of not preparing for a career. I immediately started developing relationships with the program’s professors and was offered the chance to become a graduate assistant for Dr. Dorothy Durband (Bagwell). Dr. Durband was given the task of creating a campus-based financial counseling center (Red to Black). Her counseling classes and the Red to Black center focused on the soft skills of financial planning. Dr. Durband’s primary task was to guide students through the personal attributes that enable someone to interact effectively and harmoniously with other people. 

Mastering these soft skills is paramount to practicing the art of financial planning.

Because of the existence of the Red to Black center I was able to have a one-on-one client contact with those very first students that took advantage of our services. To this day Red to Black Peer Financial Coaching continues to provide financial education and awareness to students through individual coaching sessions, presentations, and outreach booths. It covers topics such as creating budgets, building and using credit wisely, maximizing student loans, and choosing employee benefits. The purpose of this institution is to empower students to help them achieve their financial goals.

As a graduate student counseling younger students, I remember feeling confident in my knowledge of the subject matter. Empathy and understanding of my client’s situation came to me naturally and I did not find it difficult to create strong professional relationships with my clients. I feel I made the most of my graduate school opportunity.

And from the very beginning I was able to immerse myself into both the science and the art of financial planning.

Making the transition from a graduate student and a peer counselor to the real world financial planner required a few years of adjustment. The dream job of becoming a salaried Associate Planner as part of a team did not pan out. So I ended up with Plan B which was based on the “eat what you kill” model. The company I started with did at least have an established financial planning platform and I could charge for advice without having to survive only on product sales. 

As is the case with most young planners, because of my young age I suffered from a self-induced inferiority complex. Instead of being a few years older than my target clients, I was 15 to 20 years younger. I recall one instance when I was having a lunch meeting with a businessman in his mid 40’s. I was explaining to him the financial planning process. I pointed out how I charge a flat fee for analyzing his current situation, making recommendations and following through with implementation. The prospective client had his check book out and a pen in hand, ready to pay for my services. However, due to some recessed insecurity I continued talking, explaining to him the technical aspects of the planning process and how wonderful and cutting edge the software was. While still continuing to talk, I watched him put the check book back in his pocket and it never came back out. 

A few years ago I was having lunch with a client I have worked with for the last ten years.   I believe that the comment made by my client sums up the art of financial planning.

She told me that my ability to empathize with all of the different situations that continue to arise in her life and business make me a good financial planner. Even if I have not experienced a similar situation personally, I take the time to put myself in her shoes and see the problem from her perspective. Empathy allows us to look at the vast amount of technical information we have access to through multiple lenses. The logical or technically correct solution is not always the right solution for every client.

In conclusion: Without a mastery of the science of financial planning the art is just emotional. Without a mastery of the art of financial planning the science is just transactional.