tag:blogger.com,1999:blog-182748542011-04-21T22:03:26.943-07:00PSullivanhttp://www.blogger.com/profile/02217844236712834077noreply@blogger.comBlogger31100tag:blogger.com,1999:blog-18274854.post-1130821278358724112005-10-31T20:52:00.000-08:002005-10-31T21:01:18.366-08:00<p>Why is financial planning so… <em>unpleasant</em> for most clients and challenging for most advisors? Here’s an example to help explain it:</p><ul><li>Two trains – Train A and Train B – are 100 miles apart and moving towards each other.</li><li>Train A is going east at 20 miles per hour.</li><li>Train B is moving west at 30 miles per hour.</li><li>How long will it take until they meet?</li></ul><p>When I use this example in training sessions, I can watch participants cringe and squirm in their seats. Aaaaaghhhh. The dreaded word problem! Attentions drift. Brains seize.<br /></p><p>In reality, this is a relatively simple algebra problem. What happens when we add a third train… and a fourth train; with different start times and directions? When faced with these types of problems, it doesn’t take too long before most people either just guess or give up. A simpler approach – avoid them. It’s typically the point in math at school where people begin to fall out and confess to their family and friends “I’m not a math person.”</p><p>So what does this have to do with financial planning? Consider the number of ‘moving trains’ in a financial plan! The simplest retirement calculators usually have six variables (changeable or moving parts) that can affect the result. Very basic financial planning illustrations typically have 10-20 and often more.<br /></p><p>If people have a hard time understanding problems with a few moving trains, how are they supposed to get their arms around problems with 10 or more? The fact is that most people can’t, don’t, or simply won’t.</p><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/18274854-113082127835872411?l=fpsoftware.blogspot.com' alt='' /></div>PSullivanhttp://www.blogger.com/profile/02217844236712834077noreply@blogger.com26tag:blogger.com,1999:blog-18274854.post-1130709750522471552005-10-30T13:50:00.000-08:002005-10-30T14:06:57.930-08:00Problems with different timeframes require different types of tools and planning methods. The table below compares them.<br /><br /><a href="http://photos1.blogger.com/blogger/7912/262/1600/decisions-tools.jpg"></a><a href="http://photos1.blogger.com/blogger/7912/262/1600/decisions-tools.1.jpg"><img style="CURSOR: hand" alt="" src="http://photos1.blogger.com/blogger/7912/262/400/decisions-tools.0.jpg" border="0" /></a><br /><span style="font-size:78%;">An excerpt from Winning the Wealth Game: An Advisor’s Guide to Wealth Planning<br />Copyright © 2005 by Patrick J. Sullivan and Dr. David L. Lazenby </span><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/18274854-113070975052247155?l=fpsoftware.blogspot.com' alt='' /></div>PSullivanhttp://www.blogger.com/profile/02217844236712834077noreply@blogger.com3tag:blogger.com,1999:blog-18274854.post-1130252406156820012005-10-25T07:43:00.000-07:002005-10-30T13:35:50.066-08:00What's the difference between 'a financial plan' and doing 'financial planning'?<br /><br />A 'financial plan' is a printout... a document created by a financial advisor for a financial client.<br /><br />Financial planning is a process - a series of steps taken by clients as they prepare for the future.<br /><br />And, just because an advisor prints up an attractive looking book does not mean that sound financial planning has taken place.<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/18274854-113025240615682001?l=fpsoftware.blogspot.com' alt='' /></div>PSullivanhttp://www.blogger.com/profile/02217844236712834077noreply@blogger.com0