A Better Way

Occasionally an article lands in my in-box and I say to myself, “this is exactly what I’m thinking and I’m surprised that this is news to so many advisors!” Enjoy…

I heard a story a few years ago about a young couple who were hosting their first family dinner. While helping his wife in the kitchen, a young man watched as she cut the ends off a roast before putting it in the pot. Curiously he asks, “Why did you cut off the ends of the roast?” She thinks about it and replies, “Because that’s the way my mother taught me.” Confused, he asks his mother in-law the same question and she replies, “Because that’s the way my mother taught me.” Now more confused than before, he asks his wife’s grandmother and she answers without hesitation, “I had a small roasting pot, that’s the only way it would fit”. Just because something has always been done a certain way, doesn’t make it the best way. Many industries continue to do things a certain way out of habit or tradition, the financial planning industry is no exception.

Early financial planning software was developed around a process that was heavily influenced by the limitations of the computers available at the time. Like the roasting pot that was too small for the roast, computers lacked memory and processing speed forcing programmers to “cut the ends off” the analysis to make it fit. Many of the early financial planning programs struggled to calculate the plan in under a minute. This limitation made using the software in front of a client difficult. The lack of speed also meant that doing any type of automated analysis was nearly impossible. To address these limitations, software developers promoted the idea that financial planning analysis was a complicated process and that proper advice could not be provided in a single meeting. They added “what-if” scenarios so the advisor could manually incorporate a recommendation then re-calculate to see if the solution worked in advance of meeting with the client for a second or third time. Today, this trial & error approach of running multiple scenarios before meeting with a client, although very inefficient, is still the norm. However, modern programming allows complex calculations to run in seconds instead of minutes, and automation can perform many of the routine functions we deal with in an analysis.

A BETTER WAY! So why aren’t more advisors doing the financial analysis in front of clients in real time? It’s not the hardware; Wi-Fi is everywhere and computers are inexpensive and fast. Our limitation is in the processes we follow and software we utilize. By revisiting our approach, simplifying the complexities, and allowing the software to perform routine calculations for us, financial planning can become an important part of every client meeting. A financial plan is a living document and the software we use should provide real-time analysis, eliminating the need for multiple meetings. When you stop doing it the way it’s always been done and embrace these new technologies, your meetings will be less about the numbers and more about what really matters to your client.

Dave Faulkner, CLU, CFP
CEO, Razor Logic Systems Inc

If you or someone you care about would like to increase the probability of achieving their life goals and objectives, then do yourself a favour and make a date with a CERTIFIED FINANCIAL PLANNER® professional who is planning focused, not product driven. Our goal is to make sure we address our clients most pressing concerns and to make certain that we do not overlook the details when it comes to your big picture thinking!

Until next time, continue to live for today, but plan for tomorrow.


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Aaron Fransen   CFP® , CHS, CPCA   |   CERTIFIED FINANCIAL PLANNER®, Investment Advisor   |   Suite 203 - 15350 34th Avenue, South Surrey, BC V3S 0X7   |   Tel: 604.531.0022