This column is going to engage more than a bit of good, old-fashioned navel-gazing. Navel-gazing is a healthy undertaking within the contexts of an authentic profession. A trip down memory lane is good for the soul, especially when it connects us to meaning and purpose. As the saying goes, we need to know where we’ve been in order to grasp where we are going.
But there is more to it. We are at a place within our profession’s unfolding where we need review and understanding. Long story short, Father Time is catching up with our profession. In this process, we are losing institutional memories, including those addressing some of the reasons that financial planning came into being in the first place.
We are at a generational crossing point. We can still access many of our pioneers, but certainly not all of them. For others, such access will not be for much longer. Time passes for all of us; financial planners are no exception. In other words, this is a historical inflection point that most likely will never come again.
We are also losing access to the bumps, bruises and potholes the profession has encountered along the way. Without access to these institutional memories, how can we even understand the forces at work?
Ideally, financial planning should be transitioning into its most logical role as the single most important profession of the 21st century. But this will not happen with short institutional memories such as the reasons our early pioneers worked so hard initially to be mostly independent of the various financial services industries. They were not fee-only but they were fiercely independent, actively resisting excessive coziness with industry.
This is a big deal, extending way beyond the tired old arguments pitting fees versus commissions. If financial planning cannot achieve substantial separation from the financial services industries, it is distinctly possible that the financial planning “profession” will soon be settling for what amounts to permanent tenant farmer status. (Let’s face it. A so-called “profession” that functions mostly in service to big business is no “profession” at all. Then, it just needs lipstick to be complete.)
We need to understand our roots. For the most part, the first generation of our pioneers is gone. I am blessed. I had the chance to meet most of them. They were special. Unfortunately, not many of us left can even say we shook their hands much less that we understand their vitality and vision when they were in their prime. I am thinking of Loren Dunton, Dave King, Kemp Fain and Henry Montgomery here, just to name a few of my particular heroes.
Next came the first waves of folks passing through the College for Financial Planning. There are not so many of those folks around either, but you can still find Lewis Walker, Bill Carter, Alex Armstrong, Ben Coombes and Eileen Sharkey if you are lucky.
Next came the baby boomer cohort. We formed a huge wave (as we always do), bringing boatloads of enthusiasm and infectious idealism for the profession. Perhaps more importantly, we were not particularly attached to rate books, 8.5% commissions and the way things had always been. Most of us were refugees from elsewhere. We knew what we didn’t like about insurance companies, brokerage houses and law firms. Now we are in our 60s or within smelling distance of that magic number. We had our passions back in the day but the salient issues of this day are simply not likely to engage our passions.
The baby boomers are the ones that knew those first two generations. What happens now?
There are some big questions that might need answering. For example, how did CFP Board come to be? What are the legal issues of consequence around the CFP marks? And what is with that silly “®” they make us put next to our designations?
What were the big deals between the ICFP, the IAFP and Napfa? Why couldn’t folks “just get along”? Indeed, why is the profession even called “financial planning?”
Why is the CFP test organized as it is? What are the operating philosophies or legislative history behind CFP Board’s Code of Ethics and Professional Responsibility? What is the relationship between academia and the financial planning profession? What are the origins of the “fee-only” and “life planning” movements? What is the backstory behind our various institutions like NEFE and the College for Financial Planning? How come everything is in Denver? In other words, why are things as they are? How did they happen to turn out that way? Perhaps more importantly, where could they be going?
As I ponder flaws, I wonder what the pioneers might have done differently? What could the profession become? Could it truly become a learned profession in the senses of law, medicine and theology? If so, what is it missing? What is its mission and purpose? Is it really the singularly most important profession of the 21st century?
Think about it. At the end of the day, we really are engaged in something rather special, aren’t we? Yet will we realize full implications without understanding our history? How did this stuff happen? How will it continue to happen?
This is thinking cosmically about this profession we call “financial planning.” While I personally care about it and hope to contribute my two cents worth, the truth is that from here on out, the profession will mostly reflect the energies of those who are 55 and under. If this means you, this is your life after all. If you choose to spend your wild and precious life energies within this profession, you have to ask and answer the question: What does the profession, as such, mean to you and those to whom you have made promises?
This is about meaning—meaning for you and for your colleagues.
This is important because the answers circumscribe and define our profession and its unique potential within the lives of the individuals we serve and the social units within which we function. It is not enough to say we work with people and money. Of greater significance are the issues of “Why?” and “To what end?”
Therefore, taking a page from the life of Ebenezer Scrooge, I suggest that our next paths of inquiry must take us to our beginnings. Then we can go to our profession’s current situation and futures.
For now, let’s focus on our beginnings, a time not so very long ago. “Financial planning” did not exist before Loren Dunton and friends brought it into the world in 1969. Frankly, it astonishes me that these people envisioned something from nothing as they did and then made it a palpable reality. But they did—and the world is better for it.
But I am also gobsmacked by the recency. Forty-five years is nothing for bringing an authentic profession into being. Implications? Face it. Current practitioners of all ages are essentially mere pioneers still mostly exploring virgin territories.
Home base is 1969 where life conditions essentially demanded that the planning profession be brought into being. Think historically. This was a mere 24 years after the end of World War II, yet life had changed dramatically from the Depression years immediately preceding. This was especially true with respect to money in the powerful forces that it generated, namely the “money forces.” As the dominant culture moved from an agrarian/extraction society to an industrialized one, cultural reliance on money was starting to dominate. This only increased as we urbanized, expanded our reliance on the automobile and engaged in an unprecedented population explosion.
Before World War II, there was little by way of public assistance available to most people. Personal security was primarily a local affair engaging personal skills, family and community. Mobility was not easy; mostly people stayed put. By today’s standards, medicine was primitive; so were machines. Farms and ranches ran on horsepower, real horsepower.
Families were different, too. Unlike today, children had access to adults throughout the day. Indeed, in farming communities, children generally had unfettered access to both their mothers and fathers 24/7. There was no teacher’s union.
For many, “retirement plans” were their children and their land. However, money was not the only form of value exchange; neighbors were neighborly and helped each other as needed.
After the war, changing demographics moved people hither and yon. Among many other alterations in the fabric of daily life, these changing demographics served to make the United States an increasingly money-based culture. First, returning veterans came home to modernized factories and opportunities for education and business careers.
The G.I. Bill provided powerful opportunities for veterans to learn skills and gain mobility. Importantly, these veterans did not return home to their farms in pre-war numbers. Indeed, many did not return home at all but settled hundreds, even thousands of miles from their families. Indeed, men could not be kept on the farm once they had seen Paris. Also, no joke, this moved society inexorably toward an increasing reliance on money.
The postwar period saw the emergence of baby boomers. Our numbers were huge. As boomers enter our later years, our swollen numbers continue to have outsized consequences with respect to generating money forces. In order to support us, large numbers of fathers (yes, fathers) commuted to factories and offices and away from their children during the day. Large numbers of mothers (yes, mothers) stayed at their non-farm homes with us darling little boomers. Households lived on one income.
And society moved steadily and inexorably to an increased reliance on money.
Across America, a family’s primary means of access to food, shelter and clothing (indeed, the family structure itself) had a particular money tilt. The good news: For most of this postwar period, housing prices, interest rates and inflation were mostly under control. The bad news: This was temporary. The ’70s saw money issues take off. Housing inflation was huge, interest rates increased dramatically, Nixon took us off the gold standard and boomers hit the world with all the subtlety of a 9-10 split.
Of course, money was not the only source of ’60s dissonance. It was a decade of assassinations, war, racial strife and generational conflicts. Tax brackets were ridiculous; teachers were dramatically underpaid. The whole concept of “retirement” was premised on actuarial ignorance.
The creation of the financial planning profession was a necessary and appropriate response to money as a social phenomenon.
Remember, this was not a world where money functioned as it does today. Rather, the nature of money was mutating constantly, as did its role in society and its impact on the way our world works. The forces were fanned alive; by 1969, they were starting to dominate our lives. In 2014, it is even more so.
The money forces invaded our lives, but most folks need help. They are not capable of meeting money’s demands head-on without the help of a powerful and independent financial planning profession. Money skills are 21st century survival skills.
Why financial planning? Because money skills do not come naturally to people. As our world changes from one of economic diversity to one of undiversified money-based systems, the truth of this assertion becomes ever more apparent.
This is historically unprecedented. For the most part, folks have not been ready for this. They are not trained for it. Their expectations have not generally relied upon it. It is not enough to be hard working; you must be skilled with money. You must save more, spend less and avoid doing anything stupid.
Face it: This is not going to happen without the financial planning profession. That’s us.
The world needs this profession and what we do. It needs us to understand money and to make our knowledge and craft accessible to folks. In turn, we need to understand where we came from. We need to understand our pioneers and how we got from there to here. Most importantly, we need to embrace our responsibilities to objectively and independently help folks understand and meet the demands of the money forces.
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.