The current financial crisis is quite possibly humanity's most serious challenge ever. It touches everything that touches us. And it ought to be a defining moment for the financial planning profession, which will have the opportunity to define its mission and its relationship with the public, and helps folks meet money's challenges head-on.
It doesn't necessarily mean we need a "faster horse."
As we know, financial skills are 21st century survival skills for individuals and cultures. Failure to do the money right is ultimately fatal. It necessarily follows that our profession promises to be the most important new authentic profession of the 21st century. Perhaps we will actually be the most important profession, period. The world needs us.
This is not mere fluff, inflammatory rhetoric or self-indulgent braggadocio. People need help understanding money and the money forces. As the money world buckles under seemingly nonstop waves of bad financial news, what better time could there be to come to terms with our profession's mission, purpose and function?
Let's face it. This is one of those "best of times, worst of times" times. As financial planning has gained increasing respectability, the issue of money itself has grown in complexity. Its contribution to public and private order has become increasingly unreliable. Meanwhile, baby boomers must hope and dream for something less grandiose than the golden years' bliss that might have been. For most of us boomers, the future is both unknown and terrifying. Worse, the maps we might use to navigate through it are incomplete, because previous generations have not been here before, not like this. Never have our forebears relied so much on their very own self-generated and self-maintained money resources.
What does all of this mean for financial planning?
First, I suggest, the ways through this crisis must necessarily engage the likes of us planners. Next, I suggest, that as planners we must now come to grips with some of the essential aspects of our work and profession, especially embracing those possibilities that have been revealed over the past 30 years.
Before now, we had been able to keep money's uglier aspects in the corner next to the proverbial elephant-hoping nobody would notice just how complex and far-ranging financial planning could be. The subprime mortgage debacle revealed the pachyderm, warts and all. .
This, then, is the time for financial planners to firmly grasp our places in the universe and step up. This is the time to acknowledge unvarnished realities and ask ourselves what do our times require. From here to where?
The financial world is a mess, and there are hard questions being asked about what might have been foreseen or perceived. Even if the events of the last few months could not have been anticipated, what could we have known better or done differently? What should we do differently even now? We say surprisingly little about the strategic qualities of our advice. Did our most basic planning assumptions make fundamental sense? Even now, are we articulating lessons to be learned or speculating about the skills we might need going forth? Are we contributing to the conversations that must be had to make our money systems reliable? Livable?
It seems to me that authentic professions take advantage of poor results to improve themselves. When patients die or fail to thrive as hoped, physicians perform autopsies or hold peer reviews to achieve better results next time. When lawyers lose cases, the occasions are used as opportunities to reflect and rework. When structures collapse, battles are lost or the books don't balance, forensic analysts don't stop until they know the reasons why. These are viewed as opportunities to learn and grow.
Query: Are we using this opportunity productively for learning and growing? Those people on Wall Street have ruined lives. They have hurt our clients. Where is our rage? Are we questioning our relationships with the financial services industry? Are we demanding something better on behalf of our beloved clients?
Unfortunately, it seems not. Instead, conversations about money, the money forces and money's future-not to mention the role of the financial planning profession-have a sort of "see no evil, hear no evil, speak no evil" quality. The silence is rather eerie.
This is a time for looking at ourselves deeply and intensely, without self-pity, window dressing or gratuitous marketing talk. There are no reasons to punish ourselves. The subprime mortgage crisis was not our fault. Still, we might have acted differently. For one, we could have been better prepared. We could also have shared our apprehensions, more aggressively and sooner.
If we were being completely honest with ourselves, there are several more things that we probably ought to have considered in preparation for the crisis. What does the word "planning" mean, after all, if not the anticipation of potential downsides? I suggest that we need the fundamental courage to consider the "what-ifs" when we talk about going forward. I know I don't have the answers, but I believe the necessary wisdom is in the room.
It seems I've been reading a lot about "our times" lately. Barack Obama's election must surely mark a major inflection point for all sorts of things, including our financial systems. The financial crisis will also be leaving its mark on history. They will be reading about subprime and its ripples in 2309 and beyond, just like we study tulip bulbs and the panic of 1907 today. In addition, we face miscellaneous crises, each with significant financial implications.
Perhaps most important for our consideration, though, is that financial planning is coming of age at exactly the same time as major opportunities are presenting themselves to us.
It will take guts, though, to take advantage of them. Throughout our history, financial planning has been conflicted by its financial services industry roots and sales mentalities, the inherent "two masters" stress of employer and client loyalty, the laws of agency and fiduciary duties and its aspirations for becoming an authentic profession. Never has the divide been so plainly manifest. We have to look at our functions and ask ourselves what our education and our advocacy ought to include.
Asking this question may ultimately require us to articulate unpopular perspectives about the reliability of pension plans and government benefits. Some of us may have to take on specialty functions that at this point we can't see even obliquely. It may even require us to question the roles of money within our social infrastructure or to participate in the advocacy or implementation of new money forms. Indeed, it is highly likely we are in the midst of major socio-cultural transitions that include huge changes in money itself. Who is going to stand up for pension plan integrity and rational interest rates? After all, they can't continue to throw the elderly under every bus that comes along.
I suggest that financial planners are just about the only folks out there who deal with individuals and their long-term futures realistically and simultaneously-and we know it is not particularly pretty. We are the ones who look at our clients' financial security with decades in mind, fully aware of all possibilities-including the unpleasant ones.
As we look at the underfunded liability figures for Medicare and Medicaid, don't we know that these are promises that can't be kept in their current form? As we look at pension numbers, don't we know that they are catastrophic, especially in view of longevity statistics? Don't we know that current lifestyles are unsustainable for such large numbers of people for a variety of reasons?
Furthermore, what do we do with this information?
Perhaps we can find new ways to communicate our insights. For example, is even money what we think it is? Has it changed its nature and function over the past 60 to 100 years? If so, how can we understand this and then communicate? Can we help develop healthy new systems?
More and more, it seems that 21st century money more closely resembles public utility functions in the vein of water, sewers and electricity than it does the "storehouse of value" it is considered to be in the so-called classic definitions. In truth, the "storehouse" concept seems more appropriate to the realities of the 18th and 19th centuries, when money was less symbolic and had the inherent value of constituent metals or tradable certificates. Pitting a "public utility" definition of money against a "wealth" or "value" definition would likely encourage interesting conversations.
If money is required to function in the 21st century's "First World," then it is justified to ask whether people have some sort of fundamental right to access financial resources at some base level, even though this is certainly in conflict with capitalism and market theory. If that is the case, the nature of money conversation probably changes as we consider the implications for markets, the nature of "work," citizen needs and individual rights to access money. What about complementary currencies? What about the changing rules of money creation? How can we tap unused energies to meet unmet needs? Can there be different rules for international trading currencies and localized forms of reciprocity and exchange?
Are we using the right models? In their excellent essay, "White Paper on the Options for Managing Systemic Bank Crises," Bernard Lietaer, Dr. Robert Ulanowicz and Dr. Sally Goerner (lietaer.com/images/White_Paper_on_Systemic_Bank_Crises_Nov08.pdf) look unflinchingly at the realities of our current monetary crises and find money as we know it to be structurally vulnerable. Its very efficiencies render it brittle and vulnerable to periodic self-destruction and collapse. Modeling economics through systems rooted in nature and ecology rather than mechanics and engineering, they suggest that we have emphasized efficiency at the expense of resilience and sustainability. It makes sense, especially when we look at the sort of work we do with clients, one at a time. Ultimately, isn't resiliency what financial planners do? Wouldn't most of us want our clients to have the best lives possible rather than maximized net worth? If so, why have we trusted the efficient at the expense of the resilient?
And what then is our fundamental mission as financial planners? Have we misidentified the vital aspects of our roles?
I suggest that current events are instructive about financial planning's fundamental mission. It is not about "more," although that can be a part of it. It is not just about product, although that, too, ought to be a part of it. It is about engaging those financial forces fundamental to life. To take a stab: The financial planning profession's mission and purpose is to work with people and their relationships with money and the awesome forces that money generates within our lives and cultures.
Maybe this asks too much. Or too little. It certainly asks that those of us calling ourselves financial planners expand our range of skills into areas outside of our current educational processes and training. Going outside our comfort zone will be both scary and challenging. Nonetheless, it seems to me that the times are asking this of us.
What are some of these areas and how might we adapt to them? We already have colleagues specializing in "life planning" or such event driven sub-specialties as divorce, college planning, "sudden money" and life transitions. For some folks, we are coaches or 21st century pastors of a secular faith helping people address great mysteries. For others, we are futurists combining the possible with what is currently feasible. Sometimes, we function as economists trying to understand money's environment. Other times, we serve as monetary theorists grasping at money's demands on individuals and their decisions. For yet others, we are public policy prognosticators trying to see 40 years into the future.
Many clients require us to be "scenario planners" with the skills to lay out the different life possibilities and analyze what they might either require or enable. For others, we are risk managers trying to understand life's vagaries and the choices we have for addressing them, financial and otherwise. Or we serve as the functional equivalent of guides helping people through unknown territories of time, space and life. Since money touches most areas of people's lives, we are called upon to act as integrators, understanding the interactions and interdependencies of a person's family, history, culture, faith and community. (All of these are in addition to our more traditional subsets of budgeting, investments, insurance, taxes, retirement and pension planning.) Some of these areas may be new to us, but they are critical aspects of relating to money and the money forces.
I wonder: If we had defined ourselves by these roles before, how differently might we have handled the last three or four years?
This is a time for looking inward and asking ourselves some tough questions. The answers we reach over the next few years will determine the future of the financial planning profession and how we see ourselves acting in the world.