In theory, there is no difference between theory and practice. In practice, there is.
Financial planning has an identity problem. It does not know what it is. Let's face it: Neither do its practitioners.
Is financial planning an elegant delivery system for financial services industry product? Or is it an authentic profession with fiduciary level accountability? Who knows? Rival theories bounce off the walls and collide in midair, but there are no containers to hold them.
The profession is the offspring of many, but it sorely lacks a sense of self. Like an orphaned prodigy, financial planning has been nurtured by hundreds of well-intentioned aunts and uncles, all with different messages and motives. Our ostensible academics are also the unclaimed stepchildren of those aunts and uncles, all with better things to do than address the needs of a profession dedicated to individuals and their well-being. Unfortunately, this means we have developed virtually no functional or identifiable theory.
It is too bad for us. Without such theory and the development of attendant philosophies, models, concepts, principles, techniques and systems, it is effectively impossible for the profession to grow and mature into its full potential. Instead, our situation is a bit like that old television show, What's My Line? This was the game show where three plausible individuals each introduced themselves with the same name and a straight face claiming the identity of the special individual of notable achievement. "I am the real financial planner." "I am the real financial planner." "I am the real financial planner."
Under current theory, how could we know? Rather, we are left to talk past each other in terms of products, expansions of net worth, holistic practices, AUM, compensation modalities, fiduciary duties, sustainability and so forth and so on. These are issues that might matter, but they are merely collateral to our essence, regrettably pitting good folks against each other. Yet rather than making professional dialogue and exploration as productive as possible, we are unfortunately limited in our abilities to hold the sorts of conversations that enable us to grow individually and as a group.
Without proper theory, how can we understand our profession's mission, context and function? At the end of the day, how can we know its purpose? What is its point? Lest you doubt the confusion, try playing the "I am the real financial planner" game in any professional gathering.
We operate in a complex world where everyone else asserts their theories and creates realities that affect our work ... but it seems like we just ... kind ... of ... don't ... get what that means to us. We can't exactly put it into words. We know what we mean, but we don't. We know what it means to "get it," but, again, we don't. We listen to the economists blather on about consumer whatever but we don't talk back when their theories offend our notions of truth or relevance to the daily lives of our clients. It is the same with the politicians, the academics, the pundits, the executives, the marketers, the media ... namely all the folks who would set the world's agendas for our work. They act like they know, but they don't know.
Of course, when it is all said and done, this is mostly on us. We don't step up and we don't talk back even though these don't capture essential aspects of financial planning.
Take jobs. It is one thing to be "pro" job growth and talk passionately of "hard-working Americans." It is entirely another to be out of work, with yesterday's skills and habits, a scared spouse, an underwater house and a hungry family while living in an economically depressed part of the country. You can even believe in the macroeconomic joys of "creative destruction," at least until it is your life that gets in the way of those tempestuous forces.