Financial Advice Pioneer's Message Is Still Relevant

Earlier this year, the US Financial advice profession lost one of it’s true pioneers. Richard B Wagner was among a handful of financial advisors who bridged the gap between the first generation of idealistic planners and played a major role in its evolution as a true profession. He helped conceive the financial life planning movement and expanded the frontiers of an emerging profession. During that period, financial life planning was transformed from an esoteric aspect of what advisors did into the mainstream. The messages he espoused are as relevant to advisers today as they were when he first introduced them over 30 years ago.

An attorney who entered the advisory business seeking a more fulfilling vocation, Wagner produced what has become a seminal essay on the role and responsibilities of financial planners: To Think...like a CFP, which originally appeared in the January 1990 issue of the Journal of Financial Planning.

Wagner became convinced that there was much more to life than money. In his view, a client's money existed to serve their goals, aspirations and ideals. While mainstream advisors had long paid lip service to these ideas, their primary focus was to help clients attain financial independence. After individuals achieved asset sufficiency, lots of advisors viewed their work as accomplished.

Wagner (and others) put serious thought into what motivated clients, what their dreams, hopes, fears and phobias were, and devised innovative ways to address the psychology of money. In that way, people could realise their goals and achieve more meaning and purpose in their lives.

Wagner is also credited with helping expand the boundaries of how advisers should think about themselves and what they do. He helped provide the intellectual framework for advisers to think of themselves as true professionals, not unlike doctors and lawyers. He did this by encouraging people to think about financial advice not as simply a service in the transactional world. He thought the proper function of the financial advice profession to individuals and society was essential to every human being on the planet, as “everyone must address the core issues of our expertise—personal finance”. Saying “Our work has repercussions rippling throughout the essence of our culture and society” he further elevated how practitioners should think about themselves and their role.

The ideas that Wagner articulated in the essay are particularly relevant to Australian advisers today, as our industry is currently mapping out what it needs to do to become a fully recognised profession. A key point is around professional principles, of which Wagner said “a true profession and its standards are important enough that its principles generally will prevail—often at the expense of apparent self-interest.”

Defining a key difference for recognition as a profession, he states:

“With all due respect to functions served and benefits provided, life insurance sales is not a profession. Securities sales is not a profession. Tax planning is not a profession. Banking is not a profession. These endeavors are sales and functions. Each focuses on selling products that do, indeed, satisfy legitimate needs. But by inherently being outside the context of a profession, they do not have the capacity to address core issues in their entirety.”

The core issues he refers to relate to the fact that personal finance is something that every member of society must address, and doing so effectively could help them lead more fulfilling lives.

On the maturation of the industry as a profession, he was unequivocal - “The maturation process always carries its own internal clock; respect must be earned, and will not be obtained by whining.”

 

Memorable quotes:

"The essence of financial planning is not finding a product to best fit the client's needs. The essence is to provide answers and services within the context of the client's own special situation"

“We function in an arena that is of primary, and primal, importance to each and every person within all of civilization, in both micro and macro contexts. If we truly want to talk about concepts of earning a living and professional profitability, I respectfully suggest that we gaze upon the demand for financial competency in the Western world.”

A colleague on Wagner:

“He imagined the way our business should be. He made us think about the difference between the industry of financial services and the profession financial planning, saying things like ‘they are not us and we are not them.’”

 

“Richard B. Wagner, one of the genuine original thinkers of the financial planning profession, died (in March) from injuries suffered after a fall. His essay 'To Think...like a CFP' can be read here.

Article by:

Rodney Lester

Was this helpful content?Let others know - share and vote-up