How Do We Use This?
First and foremost, we ourselves need to perceive the differences between numerators and denominators. Then we need to drive it home whenever and wherever we see the confusion.
Similarly, we need to put space between advisors and the financial services industry. "Advisors" are not "producers." We advise. We work as fiduciaries on the client's behalf, hopefully to make his life better. "Producers" are recognized for making sales on behalf of their particular industry. There is nothing wrong with that. To the contrary, they may very well make an individual's life better, especially the better ones who work with financial planners. Nonetheless, at the end of the day, their motivation is sales and they eschew the term "fiduciary." Seldom are they recognized for helping someone make a terrific, financially significant decision that does not accompany a sale. They know whose interests come first.
It is a matter of function and perspective. Consider the chef and her food sources. It is the chef's job to use her skills with food and its presentation to provide an exquisite dining experience. It is the grocer's job to provide excellent raw materials that meet the chef's expectations and needs. The grocer serves many. The chef is not in the grocery business. She serves one at a time. On the one hand, the grocer is not responsible for the quality of a dining experience beyond the excellent ingredients he has promised. On the other hand, the chef is absolutely accountable to her diner for keeping her promises. The grocer is not the chef and the chef is not the grocer.
And so it is with the proper relationship between the financial planning profession and the financial services industry. We are not them. They are not us. They ought not and cannot provide our theory.
Many suggest that the so-called behavioral sciences bring us up close and personal. Guess what? "Behavioral" is not a financial planning term. It is a macro term. It roots in denominators, not numerators. While a thorough understanding of "behavioral" might help you better understand a client's actions, thereby increasing your general skill levels, it can give you no more precision with respect to the future than the last 70 years' worth of market data, trends in industrial sectors or various sets of marriage statistics. It is still not an answer for how to give your client your best work. Past still fails to become prologue.
It doesn't help that so much CFP history and training is rooted in financial product. Nor is it particularly healthy that the CFP Board's "Subject Topics Accepted for CE Credit" relies on relatively old product content and aged subject matter. There is nothing wrong with financial product, nor should these subject matters be ignored, but they are of the financial services industry, not the financial planning profession. Most of what constitutes testable CFP subject matter is from the grocery store, not the restaurant.
We need our own theory. We need theory and education for "One to the Power of One" that drives home the distinctions between macroeconomics and "finology," (that recently birthed branch of professional theory that will be describing the relationship between financial planning and individuals and money). From there, we can have theory that talks about individuals and money, such as money autobiographies or the personal money scripts that run constantly in our heads. Or our various responses to the extraordinary pressures being placed upon individuals in this money-based culture.
It is tough to know what a school of finology might include. To claim foreknowledge would just be guessing. However, it is not hard to see work involving history, philosophy or psychology. Could we relate to the money stories we find in some of the world's most famous novels? I am thinking about folks like Twain, Dickens, Steinbeck, O. Henry and Solzhenitsyn, authors who have written so poignantly about individuals in stressed economic times.
What about financial folklore? Fairy tales are often morality tales for individual relationships with money. Midas. Cinderella. Johnny Appleseed. Should these be studied in order for us to understand our antecedents? How about organized value systems of the ages? Religious traditions have power impacts upon common value systems. The origins and evolution of macroeconomic theory have had finological implications. How do they feed into the issues of today?
Do I know what appropriate theory should be? Heavens, no. Our garden of knowledge needs to emerge and mature organically. This garden is not likely to be a clean, centrally planned monolith, carefully designed by "Those who know." Truth is, we don't know what might grow, but we do know that inquiring minds with fertile seeds can accomplish amazing results.