As I've pondered the state of the world and the many problems we face not just in the United States but across the globe, my thoughts keep returning to three notable people--Confucius, Abraham Maslow and Adam Smith. As my mind pondered these individuals and the legacy each left, a number of thoughts bubbled up. Ultimately, a single question emerged: Can financial life planners save the world?
Sound a bit crazy? Bear with me and see what you think after reading this article. That premise--that financial life planners really can save the world if they really rally to the cause--might not be as far-fetched as it seems.
Confucius Had It Right
Confucius (551-479 BCE) had a kind of a genius in understanding what was wrong in the society around him. What he understood was that, in a way, the society as a whole was fragmenting. It was falling apart, it was more violent, it was more fraudulent and untrustworthy.
But more profoundly, what he saw was that a very simple re-direction--both in the family and in politics back toward the meaningfulness of those relationships and what gave them meaning--would make a huge difference. For instance he looked at the relationship between father and son, mother and daughter, child and grandparents, between counselors and the king, between the rulers and the people, the people and the rulers, and asked, "What are the obligations and responsibilities going back and forth that really have deep meaning?" Once he saw that you could bring society back toward that place of meaning, his boast was "Give me three years with the government and I will establish a truly and profoundly stable government."
Another thing he believed in--and I know we will all say hurrah to this--was that the leaders have to be taught, trained and vetted on their own morality, their own honesty, truth, kindness, empathy, and other virtues. Those were really the most important qualities that a leader had to have and this included both the rulers and their counselors.
Think about this: Suppose the two most important qualities that leaders had to have are (1) they have to be truly virtuous people, and (2) they have to have enough mental power to grasp complex situations and deal with them effectively.
It's simple. But it's a pretty big idea--and much harder to execute than espouse.
So what happened? Most of us think of Confucian society as being a top down kind of thing. But Confucian society in a way was really more like contemporary and Western society than any society in prior history. Because of that belief in those two principles--virtue and the capacity to grasp complex situations--Confucian society valued education and merit in determining who governed. Rulers from the youngest ages were trained in what it was to be a virtuous person, and the counselors were educated and chosen based on their merits in terms of both their intelligence and their qualities as virtuous human beings.
So you had a pretty cool meritocracy. A basic lesson that we can learn from Confucian times is that: You want someone who can inspire by the goodness of their heart and their capacity to grasp complex situations.
How does all this relate to financial life planning? Well, I think that what we do, what we have done as a group, is that we have spotted a similar situation in the world--a world that is fraught with divorce, with wars, with poverty, and in the financial world itself with inauthenticity, fraud, and a sales culture that is not paying attention to meaning in a person's life. And what we as a group have seen in the life planning movement is that there is another way, and if in fact we can bring the population, if we can bring people back to that other way where decisions are based not merely on self interest, but on self interest in a much deeper way, on what is profoundly personally meaningful, that in fact there is a restoration of appropriate values, not merely in the life planning or the financial planning community, but throughout the world, throughout all communities.
If we can create and demonstrate and live a model, if we can teach and train and inspire through a model that is convincing, that shows people that their lives could be so much happier and more fulfilled, mapping personal meaning in their lives against money, so that we're delivering what is meaningful, that becomes a habit that goes everywhere money is encountered. We begin to think about it when we're doing our idle spending. We begin to think about it in terms of government policy. If we model it ourselves as financial planners, we also become the new model. It is in part a spiritual model as well as a practical model for people; certainly a model as a mentor.
By really making this model stick, by creating the forms and the structures, I believe we can change the world.
One of my hopes is that the Registered Life Planner designation will be one of those forms and structures. My hope is that, by embracing this mark and what it stands for, we have a chance of changing things in a very profound way. Not merely the financial services industry, not merely financial planning and financial advisors, but the whole world in its relationship to money. That's a very profound and very hopeful thing, and a very exciting thing.
Think of this: The Confucian model lasted for 2500 years. Who's to say how long our model might go?
Other Big Thoughts, Thanks to Maslow
Another "big thought" I have is about Abraham Maslow (1908-1970) and values-based financial planning. The great thing about life planning and using the Three Questions (see sidebar) I developed and began using in the 1990s is that the values that we discover for a client are real. They're not abstract; they're not generalizations. They're rooted in their family relationships, they're rooted in specificity of creative action and they're rooted in the meaning of spiritual values in one's life.
Maslow's hierarchy of needs--which is a beautiful hierarchy--is often depicted as a pyramid consisting of five levels: the four lower levels are grouped together as being associated with physiological needs (also known as "deficiency needs"), while the top level is centered on growth needs associated with psychological needs. Deficiency needs must be met first. Once those are met, seeking to satisfy growth needs drives personal growth. The higher needs in this hierarchy only come into focus when the lower needs in the pyramid--survival needs, safety and security, love and belonging, and esteem--are satisfied. If they are not met, the body gives no indication of it physically, but the individual feels anxious and tense.
Once an individual has moved upwards to the next level, needs in the lower level will no longer be a priority. If a lower set of needs is no longer being met, the individual will temporarily re-prioritize those needs by focusing attention on the unfulfilled needs, but will not permanently regress to the lower level. For instance, a businessman who is to all intents and purposes living at the esteem level will if diagnosed with cancer spend a great deal of time concentrating on his health (physiological needs), but will continue to value his work performance (esteem needs) and will likely return to work during periods of remission.
Now, let's go back to our role as financial planners.
As financial life planners, what we're doing in a way, by making the financial planning process much more real, by the use of the Three Questions, is that we are applying that hierarchy throughout every client relationship. We are insisting that clients live at their very highest level. And it is interesting that at the top of Maslow's hierarchy, three of the top things are morality, creativity, and spontaneity. Creativity is one of the three major things that we as life planners talk about. We talk about family, creativity and spirit, so you can see the relationship. The family, creativity and spirit are the three major things that come out of the client completing the Three Questions exercise.
So we are actually delivering people of all economic means to what is most profound.
Maslow's assertion is that you can only get to the top level of the hierarchy when you have a rich enough society--and certainly a rich society helps. But it's our objective to do this work at all levels of society and to do it with the actual meaning, the specificity of meaning not an abstract generalization of meaning, with every person.
Beyond Self-Interest and Adam Smith
My third big thought relates to Adam Smith (1723-1790). Most of us in the financial world know that Adam Smith contributed hugely to our understanding of economics with his explanation of how rational self-interest and competition, operating in a social framework that ultimately depends on adherence to moral obligations, can lead to economic well-being and prosperity. His work helped to create the modern academic discipline of economics and provided one of the best-known rationales for free trade. He is widely acknowledged as the "father of economics."
Most of us, I think, would say that money is driven by what he might have called enlightened self-interest; certainly he called it self-interest. What I would argue going back to Maslow and Confucius is that Adam Smith's old model of self-interest is a model that primarily looks at competitive forces. So even when you're there as a consumer with a financial advisor, you fear that their self-interest might be taking advantage of your self-interest.
Why is it that some financial advisory models are fraught with difficulty? Difficulty occurs when the advisor is selling products and knows many details about the products that the client could never possibly understand because it is the advisor's profession and not the consumer's. It is a place that is riddled with conflict and can generate appropriate levels of distrust in the consumer.
Today, we are moving from that kind of difficult, subconscious terrain--which is Adam Smith at his worst--to a new and more enlightened landscape where rather than mere self-interest we are talking about self-interest that is aligned completely with authentic meaning. In fact we're transforming self-interest to what is authentically meaningful in one's life. That is what we're claiming is of real interest.
This is where I would say again, it isn't delivering the most money for someone that deserves being rewarded with the most money. What does deserve being rewarded is if you deliver the greatest measure of happiness and the greatest degree of freedom and energy in a person's life.
Financial life planning is now in the position to deliver that and that is a very different thing from mere self-interest and how we've thought of self-interest. Financial life planning really is at the level of authentic meaning. How this transforms the client/advisor relationship is that the advisor is so thrilled and excited to be delivering this layer of meaning that what they're getting paid means less to them than the joy that comes out of this process. It's not that money is unimportant; it's just that it's hard to conceive of a more enjoyable or pleasurable, giving profession than this world of life planning.
What I'm challenging is the old model of economics and saying that we are building a new model of economics where self-interest means authentic meaning as opposed to what we thought of as mere self-interest. It's a much healthier economic world as a consequence.
George D. Kinder, CFP, RLP, is founder of the Kinder Institute of Life Planning. The author of Lighting the Torch and Seven Stages of Money Maturity, Kinder is widely acknowledged as one of the "fathers" of the global financial life planning movement. Nearly 1,500 people are listed on the Find a Life Planner map available at www.KinderInstitute.com. A new search function that will allow visitors to search for a life planner based on business model and company affiliations (as well as geography) will be unveiled soon.