We know very well how to make fish soup from an aquarium, but we don't know how to make an aquarium
out of fish soup.
-Adam Michnik, a Polish Solidarnosc activist in the late 1980s, describing the tasks that lay ahead for a liberated Eastern Europe.
It was a time of hope and palpable fear when Adam Michnik made this observation. The world was changing beyond recognition, money and its roles included.
The Iron Curtain rules of my childhood had given way to crumbled walls and a spiritual spring of optimistic anticipation for the Eastern bloc. With the Evil Empire turned to dust, there would, indeed, be peace in our time ... except that real time gave way to the palpable realities of fish soup versus aquariums.
As has been amply demonstrated, it turns out that functional democracies require more than jubilant triumphs and self-satisfied proclamations. They require populations capable of serving themselves within their structural strictures per such fine folks as George Washington, Thomas Jefferson, John Adams and their ilk.
In similar fashion, it turns out that free markets require folks who understand freedom, contract rights, property rights and money. Realists understood that fish soup is palpably different from fish aquariums. Although each combines water with sea life and assorted other ingredients, one is merely lunch while the other is lively and lovely. Fish soup is not at all bad but it falls far short of our hopes and prayers.
Time passing. 2012. According to some interpretations of the Mayan calendar, this is the year of time's end. Perhaps more relevant to our purposes, this is a year of money's ascendancy throughout the globe. Money is, of course, the elephant in the living room known as "Earth." Money motivates the conversations between countries, companies and people, always people. Never has money been so pervasive or so shaky. Never have so many money issues mingled within such a compact sliver of time. Never have our personal relationships with money been so muddled.
What does this have to do with us as financial planners? Well, it turns out that real financial planners are essential for creating and maintaining optimal aquariums both for individuals and societies. This means informed advice, not just sales, instruction manuals and smarmy media personalities. It means understanding our times and its demands. Most particularly, it means extending the ranges of issues deemed relevant to helping individuals meet their respective goals and objectives.
For most of us, our work with individuals and money engages choices that must be made within the realities of our times and personal circumstances. If times are tough, that is our reality. So, too, when times are good. Similarly, for individuals, it is one thing to be an advisor when health is good, a marriage is flourishing, employment is rewarding and remunerative and outside obligations are at a minimum.
It is yet another when health or marriage breaks down, jobs are lost or loved ones decline. And these are just the surface issues. They don't begin to touch on money pathologies, financial habits or entire human frailties such as succumbing to various forms of temptation.
Money is as complex as human beings and the social units we have created. Yet after more than 40 years, we have developed a profession that has not really moved past the "body of knowledge" its founders created circa 1970. Neither has it expanded its service base much beyond the top 10% of net worth. Neither has it really evolved strategies for helping folks through "tough economic times," when the business cycles and commercial leadership combine to create realities and social circumstances that are not conducive to healthy and rewarding financial lives for large numbers of folks.
It is too bad that this reality compromises our potentials. We could be building aquariums. We settle for fish soup.
Shame on us that we do not see our work in broader terms. Shame on us that we do not even try to see our work in terms of money's complexities and the roles of individuals within complex economies. Shame on us that we can only see investments in contexts of the world while ignoring what it means to be an individual functioning in this world. Aquariums are not confined to five or six isolated elements; they are ecosystems of complicated dependencies. Likewise, humans and money are ecosystems of complicated dependencies.
A brief survey: Money takes in the globe. This is the year when the euro is made or broken. Can they make it work?
This is the year when China comes face to face with the consequences of its economy's uncontrolled growth. Of course, they may have figured out the magic formulae for everlasting expansion along with cold fusion, perpetual motion and locations where the Knights Templar stored their treasures. Unfortunately, we know all too well how froth and bubbles worked for the United States.
This is the year where the Arab Spring begins to mature into whatever will be. One way or another, its resolutions ought to change our world forever.
Of singular significance, this is the year when the United States generates a legitimate referendum on our country's direction. Ultimately, the dust will settle and a president will have been elected complete with effectively done deals on the roles of money and government. The consequences will be far-reaching and irreversible. They will dramatically impact the financial lives of all individuals, especially Americans.
Fish soup or aquariums? Time will tell. What we do with all of this, though, is a matter of intent, philosophy and acceptance of responsibilities.
Obviously, we should be having something to do with this. A fully functioning financial planning profession would be playing directly within the political systems and helping ordinary people address these implications for their personal circumstances. Apparently, not just yet. Rather, while folks are trying to figure out how to stretch their nickels, meet money's demands and make high-quality financial decisions, we are spending our energies attempting to fit our square pegs into important but aging "round hole" industries originally conceived to meet the demands of the first great depression and post-World War II America.
Regulations? For what? Fiduciary duties? Duh! Real financial planners do that without being told. What changed? Dodd-Frank? Who cares? Seriously, who cares? Fish soup. Is that really our work? Are these really our most pressing issues? Seriously? Between the grind of an endless recession, the ongoing uncertainties of money and the money forces and the speed of change: Who are we? Why are we here? Why do we matter? What is our mission and purpose? What is our vision? How can we build aquariums?
Frankly, in many respects it feels as though the world has come to us and asked the financial planning profession to be what it could be. It needs us to be aquarium builders not soup salesmen. It needs us to be helping individuals and families reconnoiter the demands and implications of money in their lives. It needs us to read the financial tea leaves for folks of all walks. What is in store for us?
Should this not be the time for the financial planning profession to envision its possibilities and grasp the profound needs that have emerged over the past 60 years? Instead, we are playing games we cannot win. It is time for us to claim our turf and begin to meet our incumbent responsibilities. In like vein, it is time to leave old battles behind.
It is, indeed, the age of money. Money dominates in every conceivable sense. It dominates social orders and agendas. It governs individual priorities and our most important personal decisions. It is center stage for public conversations and for national legislation-or the lack thereof. It is a 21st century survival skill for both individual and cultural units.
This is not a bad thing. Money is amazing. It is humanity's best answer for how to get us working together mostly in peace and mostly productively. Money is the raison d'être for the financial planning profession and its emergence. And we still need to figure out what that means.
I suggest it means that we must stand for the individual in creative tensions with macroeconomics and macroeconomists. It also means we must grasp how money and the awesome forces it generates impact individuals and individual economic units. This means understanding money and its roles within modern society from the inside out.
What might this entail? First, we ought to understand what is missing. For this, we can look to the macroeconomists' regard for individuals. Namely:
1. There is no word in the English language specifically describing the relationship between individuals and money.
Consider that we have words describing every other relationship we consider important to our various roles. Parent. Employee. Diner. Athlete. Customer. Parishioner. Citizen. Most of us are familiar with words of relationship and their related forms of action. Is it not curious that none of these engage our relationships with money? We need to generate those words.
2. Macroeconomists assume human beings are best understood as those "rational" but non-existent members of the human tribe known as "homo economicus."
Namely, most economic models are based on the assumption that all human beings are "rational," always seeking to "maximize" their personal "utilities"-whether they come from monetary or non-monetary sources. In other words, human beings are small, self-interested and banal.
Financial planners beg to differ. It is our general experience that money brings out the best in people ranging from carefully chosen careers to such selfless purchases as life insurance. People are relationship-oriented. They care about the quality of their lives and the lives of their loved ones.
As a practical matter, most folks would prefer to ignore money and its demands. They care for their families and their communities. They are generally generous to those in need, sometimes to a fault. These virtues tend to be especially true in those working with financial planners.
3. Macroeconomists assume that money itself is value-neutral.
And yet those of us who are personal financial advisors know that money is value laden. Money per se literally drips with personal values from every conceivable perspective. Our relationships with money are complex. They reflect our cultures, our families, our communities, our relationship with the sacred and our most profound hopes and fears. What do we do with that information?
I suggest that the one thing we do not do is smugly write off values thinking with smarmy putdowns. These values are the best of our species and should be given respect, not false pretensions of sophistication.
"For where your treasure is, there your heart will be also." -Matthew 6:21
Second, we should engage the possible, not just the low-hanging fruit. Insurance, investments, taxes, employee benefits, estate planning and retirement planning are low-hanging fruit. Not to suggest these are not important, they are just not all that is important.
What might this entail? First, we ought to understand what is missing. Where does money come from? How did we get here? Where does money intersect with the liberal arts?
For example, simply taking a list of departments of any first-rate liberal arts institution gives rise to any number of fields that ought to be part of a fine aquarium. There are the various social sciences-sociology, psychology, political science, economics. Then there are such fields as history, philosophy, religion, literature, geography, anthropology and archeology where we can gain further understanding of how humans have generated money and related to it throughout the ages.
Surely, this demands its own profession. Surely, this is the profession of financial planning.
Finally, we should especially work to understand what is "different this time." As I understand history and culture, we are living with an unprecedented reliance on money. This is uniquely individualistic, which requires the financial planning profession. It is also uniquely social, which requires us to be a part of the public conversation about money and its roles in our society. Either way, we must take seriously our responsibilities to build aquariums.
Richard B. Wagner, JD, CFP, is the principal of WorthLiving LLC, based in Denver. He is the 2003 recipient of the Financial Planning Association's P. Kemp Fain Jr. Award, which recognizes a member who has made outstanding contributions to the profession.