“The future of financial planning is combining it with emotional intelligence.”

-Carl Richards

 

As I progress through my FPSC Core Curriculum courses (Canadian Financial Planning), I’ve been volunteering my services to several friends and acquaintances. I feel like I’m gaining the vast majority of the benefit in these interactions. They have helped me apply what I’m learning (for greater technical retention), see what issues people are struggling with, and from these meetings I am slowly building a financial planning model that I intend on using in the future.

What has naturally progressed has been a two part meeting every few weeks. The first part of the meeting is follow up on actions and thoughts from the last meeting and a discussion of how things are generally going for the individual. The second part of the meeting is a comprehensive discussion about some aspect of their personal financial situation with the purpose of increasing overall awareness and financial literacy.

Or as one of my friends refers to it: The BS portion, and the learning portion. The BS portion is my favorite, that’s where I learn.

Having a solid understanding of personal finance is not enough, knowing how to apply it is what makes it useful to someone. This is what I am learning to do.

In a recent BS session, my friend was discussing how she feels like she is oscillating between spending and saving, and that she struggles with pinpointing the right balance. She knows she spent too much before and she has shifted to saving a large portion of her income in recent months, but now she hates spending money and knows this is not a healthy spot either. She feels a little stuck, all I see is progress.

What came out of this conversation is this handy little visualization for why each of our perspectives are equally valid.

 

She’s climbing the pyramid of financial awareness in herself and she’s making great progress. As she progresses through each stage, she becomes aware of the floor that she just left. Floors cannot be skipped, each one has its essential challenges that build up skills that must be obtained before you can enter another floor. Notice that I’m the stick man in the far right corner, I can’t climb the stairs for her. My job is to ask great questions, explain options, and shout encouragement. My job is to coach.

Because other people can be objective about your life, they might be able to see where you are more clearly than you can see. However, it’s hard to take advice seriously from someone that hasn’t climbed the pyramid before you. For example, next time your overweight doctor tells you that you should eat healthier, observe your reaction. They know what a healthy eating habit is, and you know, but they obviously haven’t overcome this obstacle in life and so you are dismissive of their advice. Same goes for an out of shape fitness instructor, or an in-debt financial planner.

So I believe that in addition to the knowledge base you expect from a financial planner, its equally important to use someone who has been where you are, and who can help you see the bigger perspective. This is why I’m adding a healthy dose of applied psychology to my course load, because giving someone the answer doesn’t work, you have to help them find it themselves.

I’ll leave you with a story that Kain Ramsey (Life coaching instructor on Udemy) tells, albeit heavily paraphrased:

A man had fallen down a hole. No matter how hard he struggled, he just couldn’t get out. So he waited, exhausted, and a man came over and looked down into the hole and said

“I’m a doctor, seems like you have yourself a situation.”

And the man in the hole said “Yeah dude, I’m stuck down a really big hole and I don’t know how to get out”

The doctor looked thoughtful and said “I’ve seen this before, here’s a prescription. Come see me if the problem doesn’t solve itself in a few weeks.”

The next day a woman came over and looked into the hole and said

“I’m a therapist, it seems like you have yourself a situation. Do you mind if I sit on the edge of your hole and ask you a few questions?”

The man in the hole said “Sure, I guess, I’m not going anywhere.”

She put on her glasses and pulled out a notepad. “How does the hole make you feel?” And the woman sat at the edge of the hole and talked to the man about his feelings for an hour and then got up and left.

The next day another man came over and looked down into the hole,

“Hey buddy! I see you’re stuck in a hole!”

The man in the hole was fed up by then “No shit.” he said.

The other man squatted down and leapt in the hole with him. The first man was shocked, and scared.

“WTF man! Now we’re both stuck in this hole together, you haven’t helped me at all!”

And the other man turned to him and smiled, “But here’s the thing, I got stuck in this hole several years ago and I can show you how to get out.”