Years ago, when I told my clients that I had a financial planner, their reactions fell into both categories. Those concerned about my competence responded much like the client who asked me, “Should I be worried?” The opposite response was typified by another clients who said, “That’s a pretty strong endorsement of your profession, that you think so highly of your services you seek them out from a peer.”
Taking it a step further, I would be very concerned if my financial planner didn’t have their own planner. Research shows that financial planning results in increased emotional and financial wellbeing, even for clients who are planners themselves.
It may seem obvious that financial planners should be capable of doing their own financial planning. In reality, that is no more the case than assuming physicians should be capable of taking care of all their family members’ medical problems, or attorneys should represent themselves in court, or therapists should do their own therapy.
The AMA holds that physicians should not treat themselves, therapists commonly acknowledge their own need for therapeutic support, and attorneys—including Abraham Lincoln—have long known that “If you represent yourself, you have a fool for a client.”
Why then, do so few financial planners become clients of another financial planner? Are they hypocrites? Are they too frugal to spend the money? Do they not believe that financial planning will increase their own emotional and financial wellbeing in the same way it benefits their clients?
The number-one reason financial planners do their own planning is that they believe they can do their own financial planning. Ironically, the reasons that planners don’t have planners are not unique. Surveys over the years have shown that the reasons people generally give for not having financial planners are similar to the reasons given by financial planners.
Imagine if your doctor refused to see a specialist or to trust their own or a family member’s care to another physician. Or if your attorney, a specialist in estate planning, insisted on representing themselves in a divorce or criminal proceeding. Or your therapist confessed they had never done their own therapy. How confident would you feel in their care?
The many personal benefits of planners engaging their own financial planner are the same as those any clients experience. The bottom line is that having the knowledge and skills to do their own planning is not enough. Being the client of another financial planner provides essential perspective and emotional detachment. It also protects the client planner from a tendency to place their own planning needs last.
There are also professional benefits from sitting on the client side of the desk. This experience can enlighten and inform a planner of the emotions and psychologies of being a client in ways that classes and textbooks simply cannot.
Planners who are clients also get an inside look at another planner’s practice. Along with the benefits of personal financial planning, they may gain an educational experience with as much value as a residency.
Even the Certified Financial Planner Board of Standards recently acknowledged the importance of financial planners becoming more emotionally intelligent by adding questions on the psychology of financial planning to their exam topics. They also just released a six-part book, The Psychology of Financial Planning (of which I am a co-author). It contends that financial planners who want to effectively help clients negotiate their thoughts, feelings, and beliefs about money must first explore their own.