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I Have a Dream... Not Just a Plan


How do you raise hardworking and financially responsible children in an age of entitlement? That’s a question on the minds of many clients. And according to research, it’s not being adequately addressed.

Seventy-six percent of affluent individuals said they do not believe their children are prepared to inherit wealth. And while three-quarters of them think that talking with their kids about money is a good idea, only one-third of them are actually doing it.* There’s obviously a big opportunity for advisors to provide financial education to clients’ children.

However, the key question is where to start. There is no need for a sophisticated understanding of the mechanics of modern portfolio theory in order to grasp the basics of success in personal finance. The foundational concept is pretty simple and intuitive: spend less than you earn.

If we boil it all down to its essence, basic financial planning is all about choosing between two options:

At some level, nearly everyone knows this and wants to make the best choices. But the road to hell is paved with good intentions. Whether it is attributable to laziness, procrastination, or competing priorities, the problem is an inability to take the appropriate actions.

So how do we effectively bring about the right kind of behavioral change? The conventional wisdom is that clients just need enough willpower and self-discipline to meet their goals. The problem is that’s not sustainable. Without the motivation to act, no amount of guilt or logic will change a thing over the long term.

Conventional wisdom has got it backwards. It is the goals themselves that are the key to instilling sufficient willpower and self-discipline. Unless deferred gratification is sufficiently compelling, pretty much all of us are going to choose immediate gratification. In other words, you need compelling goals in order to motivate you to do what you need to do to achieve them.

Internal desires drive external behavior. We’re not likely to hear many financial gurus say that most financial problems are due to a failure of the imagination. But that’s exactly what it is.

The French writer Antoine de Saint-Exupery famously said:

“If you want to build a ship, don’t summon people to buy wood, prepare tools, distribute jobs, and organize the work, rather teach people the yearning for the wide, boundless ocean.”

It’s important to understand that a ship is not the same as a rowboat. If you want to build a rowboat, you can do so by simply collecting the proper materials (wood and tools), giving basic instructions, and organizing the right people and plan. However, a ship is a much bigger and more massive undertaking. It involves a major commitment of resources and often takes several years to complete.

Nearly one hundred years ago, when Saint-Exupery uttered those words, transoceanic air travel had not yet been attempted. Sea-faring was the dominant method to see the world. He was saying that to build a ship, you didn’t just collect materials and people and tell them to make it happen. First, you needed to instill in those people a vision with a grand purpose that united and excited the group to do whatever it needed to do to make the vision a reality.

Martin Luther King Jr. mobilized millions and changed the culture of our nation. The catalyst was his “I Have a Dream Speech.” As the author Simon Sinek has pointed out, it was not called “I Have a Plan Speech.” Plans are practical but do not inspire. Dreams, on the other hand, connect us with our values and a deeper yearning. As a result, they have the capacity to truly transform us.

Yet, despite the importance of clients’ dreams and aspirations, these conversations are usually not happening. In a survey done by Merrill Lynch a few years ago, 85% of people who work with a financial professional said they had not had a single conversation with their advisor about their “hopes and dreams” for their future.**

What do you want? This is the most fundamental question that needs to be answered. Because unless the ‘shoulds’ of financial advice start to become ‘wants,’ it’s unlikely that children – or any of us for that matter – will make wise financial decisions. 

*Source: Allianz “American Legacies” Study (originally conducted in 2005 & updated in 2012)

**Source: Corbin, Kenneth. "New Plan: Retirees Want a Post-Career," OnWallStreet (6/15/2014).