Journal of Financial Planning: November 2016
Margaret (Peggy) Doviak, Ph.D., CFP®, is founder of D.M. Wealth Management Inc., a financial planning and portfolio management firm in Norman, Oklahoma. She is an associate graduate professor for the College for Financial Planning, a co-host of the FPA Theory in Practice Knowledge Circle, and author of 52 Things a Broker May Not Tell You.
The power of community influences our entire lives. Family traditions, friends from school, faith practices, and professional organizations all merge to make us who we are.
The FPA Annual Conference took place this year in Baltimore in September, and the three conference days, along with preconference events, created a community of people who value the profession of financial planning. This community participated in outstanding presentations over both practice management and financial planning topics, including an FPA Knowledge Circle summit that featured research in each circle’s topic areas. The community also experienced coffee breaks, receptions, lunches, and a great closing party. Friendships were made or renewed, and everywhere you listened, planners were talking with each other.
Creating community is more important than it first appears. In curriculum development programs at universities, research hours are dedicated to better understanding how people learn. My qualitative dissertation studied the influences on freshman composition instructors’ teaching practices. I asked the professors what impacted their instruction, and they told me the theories they especially valued. They cited research in effective teaching strategies, methods of encouraging creativity and, of course, theories of composition instruction. However, as I observed their teaching and grading practices, I saw a disconnect between what they said they were doing and what they were actually doing.
For example, the professor who valued creativity graded harshly for grammatical errors. Something was amiss, and I went back to a theory base I had previously studied: sociocultural constructivism. In sociocultural constructivism, Lev Vygostky, Jerome Bruner, and other theorists propose that our actions are mostly influenced by our social and cultural frameworks. Put more simply, we act in ways that are supported and valued by our friends, family, and community. In constructivist theory, “social” is defined as those with whom we have close contact, like friends and family; and “cultural” is defined as our broader contexts that include regionalism, ethnicity, religion, and professions.
In this light, I asked a second set of questions to my study participants and discovered that the way the instructors taught freshman to write followed exactly their own writing protocols. Their instruction was shaped by their personal practices, not the theories they said they followed. Further, their personal writing practices were shaped by their social and cultural communities. The one instructor who explained his driving theories and then followed them in his instruction also followed the same theories in his own personal writing habits. There was no disconnect between theory and sociocultural context.
The implications of my study were surprisingly disturbing, even though the sample size was small. It appeared that if we want someone to follow a theory, the validity of the theory is not a strong influence. However, the acceptance of the theory within the sociocultural construct of the listener is a necessity. We are not likely to implement something that is outside of our social or cultural world, whether or not it’s true or valuable.
Conflicted Clients
When I changed careers and entered the field of financial planning, I saw quickly that the research I had completed years earlier had a place in my new life. From the perspective of managing client behavior, as planners, we often see our clients follow practices that are not in their best interests. For instance, clients may have trouble maintaining the discipline to save money for retirement, or they may be very reluctant to create an estate plan. They may seek tax reduction, even if that reduction lowers their net return, and they may be conflicted about their risk tolerance level. It can be frustrating to talk and talk to a client, only to have that client fail to take our advice.
However, it is possible that even though our advice is right, it may be in conflict with the client’s social and cultural influences. For example, keeping up the appearance of “having money” causes many people to spend more and save less. Confronting mortality in an estate plan can be very difficult if the client is already dealing with loss or illness. On a lighter note, many people like to talk about how much they saved on their taxes over a round of golf.
For financial planners to shape client behavior, we may also need to shape the behavior of entire communities. Local financial literacy initiatives, media exposure to true financial planning, and government advocacy may be more than good endeavors; they may be critical for our clients’ success.
Applying Sociocultural Constructivism to Planning
However, I believe there is yet one more application of sociocultural constructivism that is key to our profession. As financial planners, we are also impacted by our social and cultural worlds. Even though we have achieved our CFP® certification, and we may have years of experience, we will still shape our practices in ways that are congruent with the beliefs of our friends and professional organizations. As a result, we need friends who value the profession of financial planning. We need professional organizations dedicated to supporting the field of financial planning. And finally, we need conferences where we can go and be with those people and organizations.
Although the curriculum of the conference is important, the creation of community is at least equally important. Without community, curriculum is less likely to be implemented. As we move away from being an industry and into being a profession, we must avoid being disconnected between what we say we do and what we actually do.
Learn More
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