Journal of Financial Planning: December 2015
George Kinder, CFP®, RLP®, is the founder of the Kinder Institute of Life Planning and designer of trainings that are recognized worldwide as the standard for client-adviser relationship skills. He recently launched the robo-adviser, LifePlanningforYou.com.
I’m here to talk about freedom. But first, a confession: I’m a financial adviser.
That’s right, I’m that scumbag of a person who takes particular delight in stealing from poor schmucks like you. I’m one of the black-suited scoundrels who will skim the cream off your wealth to make my fortune at your expense. I’m the fraud who sells products destined to fail, the guy who wouldn’t hesitate to sell you a car without an engine, or a house with toxic walls. But it’s actually so much easier for me to sell you financial products too complex for you (or even me) to understand. And if I’m lucky, you won’t have a clue what you’ve been sold. These carefully packaged products won’t collapse or reveal their hidden fees, conditions, or flawed assumptions for years; years that I get to live the good life.
I’ve been trained to find just the right moment to press your greedy buttons. And I’ll have a product that matches either your greed or your fears—right in that moment when you feel most fragile, most hungry for it.
Sure that’s me, but only in the nightmares that arise from the daily reports of fraud and corruption by financial advisers and their brands, banks, insurance companies, and brokerages that stand behind them.
Much too little has been written of the tragedies that befell consumers against the fortunes that were made at their expense. If their stories had been sufficiently told and the contrasts made, the system that created these frauds would have changed by now for certain and for good. But it hasn’t.
It’s time that it did.
Dedication to Relationships
The truth is, although I have been a financial adviser, I hope I have never been the scoundrel I’ve just described. I’m sure that most of my colleagues in financial services haven’t been that person either. But the system that fosters a lack of consumer care is still going strong and by many accounts getting stronger day by day.
I teach financial advisers to do things differently. I tell financial advisers their job is simple. Just model integrity and deliver freedom. That’s it. Holding to those principles changes everything.
It is time for systemic fraud and corruption to end, never again to return. Most people, both inside the profession and out, are fed up with how things have been. Neither regulations nor financial freedoms will fix it. Transformation doesn’t come easy. It will require a change in ethos from the ground up and from the top down that models integrity and evinces trust. It requires a dedication to client relationships rather than to the product, the profit, or the sale. Don’t look to politicians or brands to fix it; they have benefited too much from it. But financial planners are already making much of the change happen themselves, from the ground up.
Model Integrity
Still, as we have seen from the fiduciary debate, what we do is subject to many forces larger than ourselves. The financial adviser (the product seller) I’ve described could have just as easily been a politician promising us integrity, asking us to trust him, hiding his lack of ethics in the cloak of democracy. Both professions have been plagued with the lowest trust ratings possible from consumers. Both are deeply dependent on product companies for political or economic favors that cry out “Fraud!” and “Corruption!” to the rest of us.
We are in the midst of a long, slow growth recovery from the worst recession and banking crisis since the Great Depression. But the curse of slow growth is a false one, based on false economics. It is false in its assumption that growth can only be appropriately measured in monetary terms and that growth is driven by fiscal or monetary policy. It is false in its assumption that growth can only be delivered by the corporatist powers of government and brands. In truth, growth arises primarily from the entrepreneurial spirits of people. That spirit can be inspired by great advice, fostered by a great culture, and unleashed by free markets.
As I’ve labored over my new book, Model Integrity, Deliver Freedom: A Banking Manifesto and the Life Planning Revolution, to be published in 2016, I have imagined its main message as the centerpiece of a new economics and as the revivification of democracy as our forefathers intended it.
I’ve imagined integrity and freedom in every corner of our society, in every part of the globe. I’ve imagined it in the lives of the powerful and the powerless and in every conceivable institution. How would it be if everywhere we looked, institutions and people were dedicated to freedom and to modeling integrity? To understand the societal change that would be required I’ve looked in particular at seven areas of political economic importance: leadership, media (where culture is embedded), markets, entrepreneurial spirit, products, democracy, and advice. What does it say for the future and stability of democracy and capitalism, that the main agents of each are held in such disrepute?
Products and Advice
I have been wrestling with the question: is there a model of democracy and economics that would be inspiring to all and sustainable for the life of civilization? I have come to the point of view that each of these seven areas must model integrity and deliver freedom for a sustainable civilization. I call them the seven integrities. Of them, the integrities we know best in financial planning are products and advice.
We have seen the false adviser selling dangerous products (the debt we are unwinding is all products), and the gullible (or greedy) consumer buying them, with the encouragement of media and government and markets that are not free but are dominated by product companies or government.
The integrity we know best, that we have honed for 40 years and still fiercely defend and define, is advice. With a life planning approach driving a financial plan, advice that has integrity delivers freedom; it delivers clients’ entrepreneurial spirits into the world. To society it delivers organic, sustainable, natural growth. Both optimal and maximal growth, neither overweening nor thrust upon society by forces larger than ourselves.
It is time, in democracy and economics, to replace our preoccupation with corporatist power with the celebration of human freedom. This is the revolution that financial planning brings, with its dedication to the client, that we know as life planning.
It is as much the province of a financial adviser to deliver freedom into a client’s life, as it is a doctor’s to deliver health. Freedom is, after all, what we want from money.
This column has been excerpted and adapted from Model Integrity, Deliver Freedom: A Banking Manifesto and the Life Planning Revolution to be published in 2016.