Policy-Based Financial Planning Provides Touchstone in a Turbulent World

Abstract:     
Although planning policies are often implicit in the recommendations that financial planners provide their clients, taking the next step and transforming these into formal written statements can better help clients stay the course in an uncertain world. This article advances a framework for how planners might formulate such written policies.

The ideal policy will be broad enough to encompass new or unexpected events, yet specific enough to minimize doubt as to what action to take in response to changing circumstances.
Using the Integral framework, within which clients are viewed from the fourfold perspective of individual/interior, individual/exterior, collective/interior, and collective/exterior, can be very helpful when developing formal planning policies.

The article provides several examples of financial planning policies developed using the integral framework.

A six-step process is suggested for formulating policies that bridge interior client goals and values to concrete exterior actions. The steps include identifying planning areas relevant to each objective, crafting statements that capture the client goals and planning principles, using scenario planning to test the policies, and updating the policies.

An extended case study shows an initial policy, a revised policy five years later as client circumstances change, and how the policy keeps the clients on course.

In addition to giving clients a sense of control amidst the daily barrage of "noise," this policy-based approach can be very helpful to clients who use planners only on an as needed basis, and to young people whose biggest planning decisions have yet to come.

Number of Pages in PDF File: 7

Keywords: Policy, Policy-Based Financial Planning, Financial Planning, Policies, Strategy, Strategies, Personal Finance

JEL Classification: D1, D11, D12

Accepted Paper Series