Life Planning: An Alternative To Financial Planning

by Silicon Valley Blogger on 2011-08-175

What if you could incorporate your personal history and psychology with the hard numbers of goal setting to plan your finances and life?

The financial planning industry has discovered a new angle on their business which takes a broader perspective. In some knowledge circles, creating a budget and managing an investment portfolio may no longer be the central point or premise in financial services. Traditionally, we’ve used financial goal setting as a way to plan our finances: we wonder about “what to do with it all” after we have accumulated our money. But there’s an alternative option to this kind of planning, which is called life planning.

Started by George Kinder of the Kinder Institute, (what an appropriate name), life planning is a methodology that discovers or promotes the more human side of financial planning. More than merely stocks, bonds, and bank accounts, life planning is meant for those people who want to get more out of life (at least, that’s what life planners are promising). So as opposed to the approach that emphasizes hard numbers and goal setting, this appears to me as a “softer approach” to planning, which employs a different kind of reflection. From what I’m seeing here, it looks like it requires you to adapt a “big picture” view, not only of your life but also of YOURSELF, in order to help you determine how your finances can help you achieve your desired life goals (or lifestyle).

Life Planning Questions

According to George Kinder on a video on his website at the, there are three questions which are asked at a life planning session.

  1. “If you had all the money you needed: what would your life look like?”
  2. “If you suddenly discovered you only had 5 to 10 years to live, how would you change your life and what would you do?”
  3. “If you go to the doctor and it is found out that you have a disease leaving you with 24 hours left to live, what have you missed? What did you not get to do?”

These three questions are quite profound (with that last one striking me as a bit morbid), and they seem to evoke more of a visit TO your doctor’s office or your funeral director than a bull or bear market session. Yet, Mr. Kinder makes a good point and this type of planning is growing in the financial services sector.

Life planners are asked to examine their clients more deeply, by employing a bit more psychology and behavioral financial methods when dealing with them. For instance, they are trained to review a client’s beliefs about money, especially those that may be detrimental to one’s life, health and finances. Instead of simply asking about a client’s goals and mapping out a plan to reach these goals, they are also taking into account potential relationship and behavioral concerns, such as bad financial habits, aggressive, senseless risk-taking, self-sabotaging mindsets, financial ignorance or confusion. These life planners are supposedly trained to listen, empathize and inspire. The website offers a way to search for financial planners in your location, which are certified in these areas.

Who Can Benefit From Life Planning?

Since people are living longer, and more importantly, since younger people today can ANTICIPATE living longer, they might want to consider Life Planning as an alternative to conventional financial planning. This can be especially important because some goals which people may have, could only be achieved at certain points in their lifetimes. Therefore, starting early in the life planning process allows for a good overall long term perspective to one’s whole life.

Retirees can benefit from life planning as well. There are many retirees who have all the money they need (Question #1) and yet their retirement years may unfold in a rather haphazard manner. Many retirees, who are those on the brink of their golden years, may not be clear about how they intend to face the future. Questions such as those posited above (particularly #2 and #3) are harder to dwell upon and may present an exercise that many older people may prefer to avoid or delay, or may resist bringing up. Some older people may be in denial about certain eventualities, preferring instead to milk the fun out of life as much and as long as they can. For instance, they may not be quite ready to admit that things can come to an end. While estate planning in the traditional sense can cover and resolve these matters, the life planning approach may look at the same issues in a gentler way.

Because some aspects of retirement planning may not entirely be pleasant either, some people may be seeking a different way of tackling hard questions. In a sense, modern societies (as opposed to older communities) have lost the tribal rituals which surround the advancing stages of lifespan development. And so the strategies of life planning may help provide guidance along these lines that can complement traditional financial planning methods.

Life Planning In A Nutshell

What is life planning? From the advisor’s point of view, life planning comes across as a job that combines the role of psychologist with that of a financial advisor. The emphasis here seems to be on behavioral finance. For the client, what they’ll get seems to be a combination of spiritual counseling, financial planning, and a behavioral evaluation. If you’re so inclined, you may want to consider locating a certified life planner and finding out whether their advice and service are more in tune with how you’d like to prepare for your financial needs now and into the future.

I’d be curious to know if you’d be open to this holistic approach to planning your finances. Does life planning resonate with you? Or is this just another way to “market” financial planning, perhaps to a certain type of audience or customer base? Or more interestingly: are financial advisors already employing life planning techniques in their work without necessarily advertising it as such? If you’re a financial advisor, it sure looks like a good angle to approach your business.

Created May 21, 2010. Updated August 17, 2011. Copyright © 2011 The Digerati Life. All Rights Reserved.

{ 5 comments… read them below or add one }

Susan Shaw August 18, 2011 at 3:29 am

If I hired a financial planner, I’d expect them to learn as much as they can about me, my money requirements and expectations and my profile…. not just my goals. I think it’s a given that all successful planners conduct business this way?

Derek August 18, 2011 at 3:28 pm

I think a big part of life planning is: how have you prepared for your family when you are gone? Are you organized, does your family know where all the financial pieces are, and have you left them enough money? Life planning is not only about planning “if you have limited time left”, but it is also about “is your family financially prepared when you are gone”.

Funny about Money August 21, 2011 at 4:57 pm

They sound like compelling questions. But…

How many of us, realistically, are ever likely to have all the money we need — especially in the present economic circumstances and those we can look forward to?

Any of us may have only 5 or 10 years to live. But any of us also could have 30 or 40 years to live…even after retirement. We have only one choice: to plan for the worst-case scenario, which IMHO is living a very long time after one’s earning capacity ends.

Any of us could die tomorrow. No matter how carefully we plan our bucket list, all of us will have some regrets.

sheryl hackworth August 25, 2011 at 12:39 pm

I agree that we only have a certain number of days. Life planning sounds great in concept. But how many people out there actually plan their lives or just let it happen? I for one like having things planned, but I am realistic enough to know that many things happen that we do not expect. I think it has to be a combination of life planning and being ready for those things that just happen.

Anthony September 17, 2011 at 5:48 am

The best way to stay on top of your financial goals or any goal for that matter is to have a plan and understand the next step. Perhaps self managed funds can be your way to success when you have clearly defined goals as mentioned, however you must stay on target with your plan.

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