Live your life: set goals and make plans that allow you to survive a crisis.

• Author: Framson, Joel H.
• Position: Financial Planning - Risk management and portfolios - Brief Article

After Alice fell down the rabbit hole, one of her first questions was, "Which way shall I go?" The Cheshire Cat wisely answered, "That depends a good deal on where you want to get to." Similarly, planning after a crisis must take direction from where you want to go.

For a financial and investment plan that will survive a crisis, your clients need to look into themselves and make a sobering analysis of two things: What is their purpose? and How will they deal with risk?

PLANNING WITH PURPOSE

As a financial planner, you typically begin your work by documenting your clients' short-term goals, such as buying a new car next year, or long-term goals, such as a stable retirement. You categorize goals that way to prudently approach making sound investment decisions.

However, an important step to establishing a plan that will survive a crisis is defining your clients' purpose. Purpose brings clarity and vision to who your clients want to be and the core values that will guide their specific goals and actions.

By infusing purpose into financial planning, a curious change tends to elevate the orientation to more of a life planning process. Life planning encompasses life goals, only some of which may be financial.

DEFINING A CLEAR VISION

After a crisis, people often take an inventory and take action. When that action springs from the clear vision created in the planning process, you can most effectively create a path to help clients achieve specific goals.

Here's an exercise you might try with your clients, but try it yourself first:

Sit down in a quiet place, by yourself or with a significant other, and answer this: If you were to sit there in three years and reflect, what would have had to happen--both personally and professionally--to make you feel that those three years had been successful? Such questions help us begin to plan with purpose.

To help navigate toward those successes, you set milestones for the end of the first and second year so you know if your clients are on course. To give your clients the best chance to succeed, you can create action steps for each 90-day period. This provides fairly immediate positive reinforcement to nurture your clients during their journey.

TEACHING CLIENTS ABOUT RISK

No matter how clear your clients' vision is when they set their plans, they will encounter situations that obstruct the path to their goals and create uncertainty.

Risk is not a new concept to financial planning. You teach your clients that as...