Money is a mesmerizing mystery. Yet for all its charms and the abundant attention devoted to it, few can answer the question: “What is it?” Fewer still understand how it gets created. Or the various aspects of its nature. It seems to embody Winston Churchill’s description of the prewar Soviet Union: “a riddle wrapped in a mystery inside an enigma.”

It’s at the core of the financial planning profession, but the profession is still developing its own relationship with it. Still, financial planners, with their comprehensive skills and holistic understanding of people’s personal relationships with money, are in a unique position. Truth is, most folks need help relating to money; they need someone who can help them understand it. Accordingly, planners themselves need to thoroughly understand it—what it is and how it works for both individuals and collectives. I call this Financial Planning 3.0. 

This approach considers money not only from the outside in but from the inside out—from the perspectives of individuals, families and communities—in a stark contrast to macroeconomics and investment theory. And it treats money, appropriately, as the most powerful and pervasive secular force on the planet. It also treats financial planning as the most important profession of the 21st century. Financial Planning 3.0 posits a new “liberal arts” based on an academic discipline I am calling “Finology.” This all means thinking both historically and futuristically. How did we get here? Where are we going?

How We Got Here

Financial Planning 1.0 was birthed more than 46 years ago by visionaries who saw a need to bring multiple skill sets to money. At a time when some states banned a person from selling securities and insurance at the same time, these people saw that advisors’ personal relationships were key. These visionaries, convened by insurance salesman Loren Dunton, filled a gap by creating the College for Financial Planning and its product-oriented curriculum. With this, they generated the “CFP” designation.

Financial Planning 1.0 arrived just in time for the ’70s, when the world went off the gold standard and adopted fiat money as its norm. It was the end of a 25-year postwar period where money itself was turned inside out—a world where most folks were, at most, one generation removed from the land. A world of increased urbanization, shifting demographics and the mutual interdependencies and political tensions of a money-based culture. Inflation raged, housing prices and interest rates soared, and a scourging bear market shook the economic confidence of the nation. 

Baby boomers took center stage in this storm. It was increasingly clear that personal financial security was vital to lives well lived. This meant insurance, investments, a good job with benefits, a sound home and other attributes of financial safety and security. 

Industry responded. Financial Planning 1.0 was all about the financial product it generated—and, of course, sales. Some of this product was good or great. Other products, maybe not so much (think tax shelters, penny stocks, limited partnerships and S&Ls).

This version of financial planning was hailed as the greatest product delivery system ever. Rewards were for “producers” (the ones with great sales numbers). They got the compliments on Monday mornings and the trips to Hawaii.

Later in Financial Planning 1.0, personal computers came to our desks. They turned out information instantly. We could crank out custom proposals and detailed analyses with impunity—selling it by the pound.

But after a while, we saw that there was more to money than just the right product. The people who had built planning thought aspirationally about it as an authentic profession. They realized that money was, in fact, an intensely personal subject. 

Thus came Financial Planning 2.0. In this, different practice models emerged as client-centric financial planners sought to cut or minimize their duties to financial product employers. Personal client management systems emerged. Computers and targeted software reduced planners’ needs to rely on these product companies. Many saw the conflicts of interest and the “two masters” problems inherent in these relationships and worked diligently to avoid them. The fee-only model was adopted whole cloth by many while others developed hybrid practices with notions of closer client relationships and reduced conflicts of interest. 

Self-regulation took huge steps forward. The profession developed a meaningful code of ethics and some disciplinary rules with teeth. Despite the resistance of the financial services industry, common talk centered around fiduciary standards and putting the client’s interests first. 

Collectively, we took many steps to make this a reality, including an aggressive, consumer-friendly lawsuit against the SEC.

Yet for all that, we did not really step into the world even as the world increased its dependencies on money. On the whole, we did not grasp the importance of our work, much less its power. We did not comprehend the realities and implications of personal finance within an economic system that marginalized the individual even as it demanded that individuals play the money game. And they had to play it skillfully. There were huge costs for bad luck or incompetence. 

Money skills have since become survival skills, even though they do not come naturally to human beings.

Unfortunately, Financial Planning 2.0 cannot take us where we must go. It simply lacks a public element. And it continues to keep unsustainable ties with industry. If clients come first, we cannot, as fiduciaries, have legal obligations to serve non-clients.

In no small part, Financial Planning 3.0 now means we should be part of an early warning system for bad product, not silent accomplices to virtual fraud. Manufacturing, sales and advice are all honorable undertakings, but they ought not be mixed. Farmers grow food for the grocers to sell to chefs, who serve their patrons. The patrons get the best of each but the roles in the chain are clear.

We also need a vocabulary and we need separation from macroeconomics in general. Any group that looks at individuals through the lens as just one of a group—as a species called “homo economicus”—must be viewed skeptically.

This worldview asks about our profession’s priorities. Is it the financial planner’s primary duty to maximize the client’s money? Or is it to insulate the client from harm or be a coach? Or is it to “help individuals and families address their personal relationships with money and the fearsome forces it generates”?

An authentic profession needs strong academics. Accordingly, what areas of knowledge and inquiry ought to inform Financial Planning 3.0? I personally see financial planning as the ultimate liberal arts profession. Shouldn’t our gardens of knowledge be resplendent with cross-disciplinary relationships?

What public roles ought we play? Do we just serve as informed advocates for individuals in matters affecting their individual relationships with money? Or can we provide counterweights in issues of public policy? How can we help leaders and decision-makers grasp the implications of their work without getting caught in impossible politics?

Can we help grow new, perhaps healthier forms of money? Can we develop better methods for making our skills and knowledge accessible to those who want and need them?

Financial Planning 3.0 will contribute to the most important profession of the 21st century because we work with the most powerful and pervasive secular force on the planet. Because money competency is a 21st century survival skill. It has become our primary source of mutual interaction and is an integral part of every issue of consequence facing individuals, governments and enterprises alike. It touches everything and everybody. So the world needs us to step up.