What’s Wrong with Financial Planning? (and the Solution!)

Did you know that the financial planning industry has been around for less than 50 years!? In the span of just a few decades, the industry has had great influence on how people approach their money, where and how they save and invest.

Is this a good thing? Well, yes and no. Today, we give a bit of history and revisit some video interviews with Partners for Prosperity’s founder, Kim Butler. You’ll get an overview of financial planning—and why we don’t do typical “financial planning”—and the Prosperity Economics solution.

How Financial Planning Began

According to “A Concise History of the Financial Planning Profession” on the website of the Financial Planning Association, the financial planning industry was conceived in a December 12, 1969 meeting of 13 financial service industry leaders at a hotel near Chicago’s O’Hare airport. They were gathered together by Loren Dunton, a sales trainer from various industries who had recently authored a book called How to Sell Mutual Funds to Women. The country was in a recession, and according to Dunton.org, those who gathered were “financial product and service salesmen… driven to find a solution” to the financial challenges faced by Americans, including those in the financial industry.

An organization grew out of that meeting that would eventually be called the International Association for Financial Planning (IAFP), with an educational arm that would become the College for Financial Planning. The first CFP class graduated in 1973—only 45 years ago. Those completing the curriculum and passing the exam earned the CFP® (Certified Financial Planner) designation, as Kim once did.

Although one of the financial planning industry’s worthy goals would be to shift the financial industry’s focus from the latest financial products to financial education and the investors themselves, the industry has always had certain blind spots. The CFP curriculum revolves around how to plan for insurance, investments, taxes, employee benefits, retirement, and estate planning. However, it barely touches on the two economic forces responsible for creating the majority of wealth: entrepreneurship and real estate investment. In this way, financial planners are nevertheless trained to focus on solutions put forth by large brokerage firms and banks more so than the building blocks of wealth. In similar fashion, we see doctors learn more about prescribing medications from pharmaceutical companies than about nutrition, exercise, and stress reduction—the actual building blocks of health. As a result, those attempting to build wealth (or health) are often advised to delegate control to others.

We are grateful that financial planning encourages people to save and invest—of course they are much better off when they do! But there are many downsides to typical financial advice and financial planning. For instance, the notion that you can effectively “plan” for the unpredictable actually gives investors a false sense of security. Kim explains this to industry colleague Steve Savant in this interview on “Why Financial Planning Doesn’t Work”:

There are other downsides as well, from faulty math, exposure to volatile markets, and assumptions that more risk will surely equal more reward. (We detail more problems with financial planning in our book, Financial Planning Has Failed, which is part of our Prosperity Accelerator Pack.)

Many Americans are saving in their 401ks and other qualified retirement plans, crossing their fingers it will be “enough.” Meanwhile, even those considered relatively wealthy are often unsure of how to grow their assets while protecting them from market instabilities. And if financial planning is problematic, what then is the best way to attain economic freedom and prosperity?

The Prosperity Economics Solution

Prosperity Economics offers a way out of the mess. It offers a total paradigm shift about wealth-building. Prosperity Economics questions the financial assumptions we’ve come to accept as true and provides an alternative to “typical” financial planning. It is based on PRINCIPLES rather than products. (Actually, it operates as an “opportunity filter” for investments.)

While sometimes hailed as the latest greatest thing, Prosperity Economics hasn’t been so much discovered as rediscovered. Prosperity Economics employs common-sense principles and strategies that preceded the rise of 401ks and the financial planning industry. It shows you how to optimize wealth by keeping it in your control rather than delegating your financial future to Wall Street, big corporations, and the government.

As a matter of fact, “Control” is one the 7 Principles of Prosperity.™ Kim explains all seven to Steve in the interview below, “The New Prosperity Economics.”

How to Apply Prosperity Economics to YOUR Finances

Want to learn more about Prosperity Economics and the Prosperity Economics Movement? You’ll find a chart on this page that explains the differences between Prosperity Economics and Financial Planning. You’ll also find an invitation to download a free ebook that goes into more detail about the Prosperity Economics solution, and how it can be applied to areas such as:

  • Saving
  • Investing for income
  • Investing for growth
  • College education, and
  • Real estate.

There IS a better way than relying on an ever-changing economy and subjecting yourself to the harrowing ups and downs of the stock market. Learn more about Partners for Prosperity and how we can help you experience more wealth and less worry!

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