Values-Based Financial Planning

The strongest foundation for the financial plans you create will always be your clients’ heightened awareness of the nature, influence, and importance of their values. Therefore, in your discovery and data gathering activities, it is essential that you engage your clients in a process of thoughtful reflection to help them identify and clarify what is truly most important to them as individuals. 

The next step is to allow this understanding to guide your client conversations and to provide them a framework for establishing meaningful financial and life goals. For example, you can suggest to your clients that they view their lives as being multifaceted and to think of each facet as a critical component of their “life portfolios.” 

In addition, you can encourage this more holistic mindset by discussing each facet of life (i.e., family, work, learning, leisure, community) with them and asking revealing questions such as the following examples: 

  1.  “What is your current level of satisfaction in this area of life?” 
  2.  “What do you value most in this area of life?” 
  3.  “In what ways can you invest in this facet to enrich your life now?” 
  4.  “What ‘riches’ do you want to experience in this area of life in the future?” 

Questions like these will help your clients to sharpen their focus, prioritize their goals, and develop a vision of life that is compelling and motivating. You will also find that the clearer your client’s mental picture of the future becomes, the easier it will be for them to move toward that image

More than a decade ago, Kris Arzen wrote about the benefits of values-based financial planning, and her insight and advice is even more relevant today: 

… when you know the who, what, and why about your client, you do them the greatest service by designing plans that help them address those values. Doesn’t it make sense that the client would want to act on those ideas faster than they would act to buy a particular mutual fund or life insurance policy? That is because you have been able to frame the plan in terms of their life. They told you what’s important and you listened. 

“Values Based Planning: Seeing the Whole Client” 

                               - Journal of Financial Planning 

There is a lot of truth to the old saying, “If you don’t know where you are going, any road will take you there.” This is living life without a rudder and can be wholly unsatisfying. Therefore, as you help your clients to plan for the future, you can position yourself as a trusted advisor by encouraging them to envision and articulate the various elements they want to include in their customized life portfolios.

Whatever they identify and claim for themselves will act as an internal compass, guiding both financial and non-financial decisions they make along life’s journey. And, most importantly, as they purposefully and progressively make room in their live for what is most meaningful to them, the degree of satisfaction and fulfillment your clients experience will grow and multiply.

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