Is the pursuit of your goals based on your values (values based financial planning)? Often in the speed of life, we don’t take the time to sort out what matters to us. What many of us get is someone else’s idea of what our values should be. There are two dimensions of values based financial planning: goals/dreams and building/implementing.
Values based financial planning goals
What do you think of when you hear values based financial planning? Often conversations regarding finance do not include values. We often hear the pursuit of happiness involves the pursuit of money for money’s sake. I was once told that I should not concern myself with anything other than making money today. Once I had money I could then decide to be charitable.
As a CERTIFIED FINANCIAL PLANNER™ professional, I believe that the first step is articulating your values. A few examples I have heard include:
Your thoughts around family may include your children’s or grandchildren’s education. That may be a private school based on your religion and/or paying for a four-year college education. For others it may be a stand against abortion or supporting foster parenting. Your concern over climate change may be marching against the XL pipeline or promoting recycling and other sustainability measures.
I have found that many of our long range goals come into focus as we get closer to the time frame we want them to be realized. However without an intended destination we won’t know what we need for the trip. Often there are many competing objectives. We must make value judgments as to which ones can be fully achieved or what combination to satisfy each we are comfortable with. Often this process of prioritization helps us better determine what truly matters most to us.
Values based financial planning design
Let’s say that you want to build a house. You may be so excited about having house built that you may not express your desire for green building. Further, not being an expert in the field you may not know the extent of your options regarding what a green building could be. Hopefully your architect would ask if you had a concern over using or not using green materials. Fortunately a couple of my clients are residential architects which has increased my knowledge. Some materials may increase the cost of construction. Some of those may have a payoff in the short run in terms of lower operating costs. If you’re like my sister in law you would be willing to absorb these costs even if there is a short-term pay off because of your strong desire to combat climate change. You may decide that some are worth the investment and others are not. That’s why it is your values based financial planning and not someone else’s. However, if the question of green building materials had never been brought up you have no idea that this desire of yours would be incorporated in your house.
You may also want to incorporate charitable planning into organizations that promote your values around sustainability and climate change. You may do this with ongoing charitable contributions during your life and charitable planning at your death. I feel strongly that one should always have an estate plan to reflect your values. While most of us assume tomorrows, none of us is promised the next minute.
Building on your values based financial planning
Values based financial planning for many means socially responsible investing (environmental social and governance investing (ESG investing). Continuing with the theme of your desires surrounding climate change you could have your investment advisor representative seek out investments in companies whose business is either primarily green or make significant investments in greening their operations and social outreach. These companies may include whole foods and Tesla just to name a couple. There are many investment strategies that you could pursue. You may be familiar with the terms active and passive investing. Inside of these strategies there are types of investments for you to use in pursuit of risk and return objectives your plan requires.
Your goal should also be discussed with your tax advisor and estate planning/wealth planning attorney so that they can further refine your plan and their specific areas of expertise. Having a coordinating wealth advisor is important to make sure that all of the professionals working together to maximize the achievement of your goals.
Ready for a values based financial plan checkup?
Are you engaged in values based financial planning today? If not, then let’s not let another day go by where you are not pursuing your values rather than someone else’s. If not us, then who? If not now, then when? Fill out our contact form today or give us a call at 773-699-4756.
Socially responsible investments are subject to the risk that, because social criteria excludes securities of certain issuers for non-financial reasons, investors may forgo some market opportunities available to investments that don’t use these criteria. No investment strategy assures a profit or protects against a loss.