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by Conor Boyd
Like many industries, the financial services industry has evolved over time. Financial Advisors and financial firms themselves work within various levels of this evolutionary continuum. Within each level, there is value to be found as well as limitations. The most recent level that I have practiced throughout my career is what I have coined as “Pivotal Financial Planning”.
Before we discuss Pivotal Financial Planning, I would like to give brief descriptions of the other levels of financial planning. In the beginning, many financial services firms practiced what I would describe as a pure selling model. You may think back to the days of the life insurance salesman going door to door or the well-dressed stockbroker “pitching stocks” over the phone or in person. This level tends to be heavily focused on features and benefits and creating the emotion within the customer interaction to buy from the salesperson. This level is very transactional and rarely does it lead to a long-term client relationship.
The next level of evolution within financial services was a needs-based model. In this model, the professional is trained to ask questions to uncover a need. If a need can be uncovered, a product may be offered to satisfy the need. Many financial professionals still work within this model today.
Then we moved into what the industry often refers to as a goals-based planning model. This style of planning helps identify where a client currently is, where they would like to be at some point in the future, and what actions and tools are needed to help get them there. You will notice that as you move through these evolutionary levels, the process becomes more client-focused and collaborative as opposed to simply selling a product.
Most recently we’ve arrived at a Pivotal Financial Planning model. Just like we share similar genes to our ancestors so you will find similar foundations within a Pivotal Financial Planning model. With that said, there are some key differences. One such distinction is that it is extremely difficult to predict the future (some would say impossible), and it is also difficult for clients to imagine or be sure of what they would want in the distant future. As humans, we tend to think from our circumstances today. For example, we project our present health into the future. Today you may be perfectly healthy without any physical limitations. Can you be sure that will continue for the rest of your life? Do you think your planning needs or desires may change if your health changes?
Similarly, we tend to project our current financial state into the future. If you have a meaningful amount of debt or are possibly behind in your retirement savings, you tend to place these limitations into your future vision. We can imagine, we can dream, and we can plan, but there is a very strong chance that the future will be different than the one you envisioned.
Another challenge in a goals-based planning model is predicting the future landscape. Can you tell me what taxes will be 10, 20, or 30 years from now? Do you know what inflation will be? How about the stock market? Will that be up or down when you retire? What about health care costs and delivery of health services? Will we be paying for that? Will it be free? We all have guesses, but the reality is many of us will be wrong.
Pivotal Financial Planning is all about building a framework that works in many different environments. It has the flexibility to move in many different directions. It implements actions and strategies that can always be relevant, almost like a scientific law. Pivotal financial planning allows for you to flexibly pivot to help accommodate your needs and interests as the future becomes more clear.
Conor Boyd is a Registered Representative and Investment Adviser Representative of Equity Services, Inc. Securities and Investment Advisory Services are offered solely by Equity Services, Inc., Member FINRA & SIPC, 333 Westchester Ave, South Building Suite 3302, White Plains, NY 10604 914.428.4000. Thoroughbred Advi-sors, LLC is independent of Equity Services, Inc. TC119685(0221)1
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