The world of financial planning is better off because of Dick Wagner.  He’s been a thought leader and one of the very early practitioners of the craft.

Today we’re going to talk about his new book Financial Planning 3.0.  You’ll learn how the world of financial planning started with products and moved into what’s known as life planning.  Financial Planning 3.0 takes you past the traditional area of planning and moves into a full liberal arts approach to the planning process.

Some of the topics we’ll be talking about today are:

  • What the difference is between the financial planning profession and the industry of financial planning.
  • The fact that you are an individual and need to be dealt with as such.
  • Your relationship with money is unique and you need to have your needs dealt with on a one to one basis.
  • How financial planning is the ultimate liberal arts profession.
  • Why Financial Planning 3.0 is a very complex issue and why you need to be thinking about planning for a very long life.


Narrator:         Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.

Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.

Josh:                Hey, How are you today? This is Josh Patrick and you are at The Sustainable Business.

Today, we’re in for a treat. Today, we have my friend, Dick Wagner, with us. And Dick is one of the smartest people I’ve ever met. He has just written a really interesting good book. The book is so good and so important, I actually put it up there with Peter Drucker’s Management: Tasks, Responsibility. And if you’re in the financial planning world and you happen to be listening to this podcast today. This is not an option. You must pick up this book and you must read it. It’s that important.

So, I want to bring Dick in. I want to start the conversation. We’re going to talk about what Financial Planning 3.0 is today. And along the way, we’ll probably cover 1.0, 2.0. But it really is focusing on 3.0.

So, hey, Dick, how are you today?

Dick:                I’ve been better. Actually, I’ve got a cold. I apologize.

Josh:                Well, we’ll take your apology in fact. And you usually don’t sound this gravelly but we’ll get over it.

So, at any rate, let’s talk a little bit about your new book, to start off with. What is Financial Planning 3.0?

Dick:                Financial Planning 3.0 is meant to be an eclectic, sort of liberal arts approach to all the issues that can arise in the course of a good quality financial planning relationship.

Josh:                So, when you say liberal arts approach to financial planning, you know, I think most people think of financial planning as being about money and numbers. How does that fit into liberal arts?

Dick:                Well, financial planning is about a lot more than numbers. That’s the most rudimentary approach. And that’s what I call Financial Planning 1.0 which deals with financial products. And that’s how financial planning came onto the planet. It was through the financial product mechanism back in 1969 with Loren Dunton and combining a whole lot of different fact finders.

But Financial Planning 1.0 is a tangible approach – a product-oriented approach to our relationships with the client but that’s really only part of the story. The other parts of the story deal with Financial Planning 2.0 which is really the life planning portion of financial planning that was initially accomplished by George Kinder back in the ‘90s which dealt with how do we, as individuals, relate to money and our relationship with money. Financial Planning 3.0 is what’s emerging now in terms of the profession.

And I do draw the distinction between the professional and the industry. But the profession is dealing with how we, as communities of interest, deal with money and our relationships with money. And that those communities can go from families, to husband and wife, to communities, to States, to regions, to countries, to the world and how financial planners fit into our individual relationships with money from all of those different perspectives. And it’s very complex. And it’s very, very important that money is a chief way that human beings have of relating to each other. And we confuse it, we’re just starting to unravel our relationships.

Josh:                So, one of the things you talk about in the book which I found really interesting is the difference between macro and micro. Would you spend a little bit time talking about what the difference is and why that matters?

Dick:                Well, actually, I’ve got to exclude micro because that’s a complex subject. But the macroeconomists, our classical economic theory, is how countries develop the overall, overarching economies. And it’s where all of our thinking has gone, as all of our academic thinking anyway, that we’ve just begun to think in terms of our individual relationships with money.

So, the macroeconomists are looking at capitalism, communism, big systems, big numbers. Microeconomics is actually a subset of macroeconomics and that’s what makes it complicated because it doesn’t mean what you think it ought to mean. It means a subset of macroeconomics.

But what we’re doing with financial planning is working on our individual relationships. And the small, hard to quantify, hard to qualify relationships that individuals have, it’s complex, and it’s not the way we’ve had of looking at it. And we haven’t really spent maybe not yet 50 years looking at our relationships with money from that perspective.

Josh:                So, when you’re with individuals at the macro level. You know, we’re making lots of generalizations at the macro level, certainly.

Dick:                Right.

Josh:                And at the micro level, maybe a little bit less. But at the individual level, it seems to me that if you’re making an assumption that all people are blah because of X, that probably is not a really effective way to work with individuals.

Dick:                I think, it’s nonsense.

Josh:                And when you say “nonsense”, what do you mean by that?

Dick:                That everybody’s different. Our relationships with money are as unique as our fingerprints. And so, if we’re working with a client, I think it’s dangerous to assume you know anything, other than perhaps what they’ve come into your office saying, this is what they’re looking for, but it’s difficult to make assumptions. Everybody has got their own stories. And even within a family, your relationship – you have a sister as I recall, is that right?

Josh:                That’s correct.

Dick:                Your relationship with money is much different from your sister’s relationship with money even though you were raised side by side by the same parents.

Josh:                Yeah. There’s no question about that.

So, it seems to me that a really good Financial 3.0 adviser or, for that matter, any adviser who’s working with individuals has got to become an expert at listening, asking questions and really hearing the answer below the answer.

Dick:                Well, I believe that financial planning, done right, is the ultimate liberal arts profession. That when we bring the liberal arts in of financial planners dealing with everything from the most tiny slivers of elements of emotions, of biology, of issues unique to that particular individual, all the way to where does the individual fit within the cosmos. So, it goes from the smallest of the small to the biggest of the big. And everywhere in between is fertile ground for understanding something about our relationship with money. So, it’s important for the individual advisor to be able to put all of those in perspective.

Josh:                This is going a little bit off tack, but actually this is one of my issues around this. Today, the trend seems to be moving away from people paying for financial planning and have it bundled as part of investment management. To me, that sort of seems like something that the profession might not want to be doing because you’re sort of confusing the way revenue is earned versus the services provided.

Dick:                Well, that’s as it ever was. The original subjects of financial planning of the CFP marks were investments, insurance, taxes, estate planning, retirement planning, and something else that sort of touches on all of those. It’s all things you can touch, smell, sense and feel.

But coming into 2017, we’re facing lifetime decisions that are far more complex than just those elements and we are asking people to make decisions based on anticipatively long life spans with an unknown economy, with unknown costs and with unknown limitations. And we’re asking people to make quality decisions in the face of those unknowns. And that’s incredibly difficult. Literally, impossible to do with confidence in the accuracy of numbers and the accuracy of predictions.

Josh:                So, we deal here, at the Sustainable Business, with private business owners. And, traditionally, you would’ve thought that, “Gee, you will be out of your business at 55 or 60 years old and riding off into the sunset.”My father’s 89, about to be 90 soon, that’s a long time to be in retirement.

Dick:                Yes.

Josh:                So, if you own a business, must you want to be re-thinking when you actually want to leave your business?

Dick:                Absolutely. And I think that’s one of the financial planner’s obligations to a client, is to “what are the alternatives?” The relationship with money isn’t just “How do you feel about it?” And, you know, “What do you put into the collection plate on a Sunday morning, or Saturday morning as the case may be.” But it’s complex. You really are looking at what sorts of decisions should the individual be making to accommodate the impact of money in his/her life.

That’s, again, why I say financial planning is the ultimate liberal arts profession. You know, my mother is likewise 90 and it’s an interesting thing to watch somebody at that age come to different kinds of decision that they need to be making. And she’s healthy.

Josh:                Yeah. I get that.

So, that’s really interesting, is that as I’m thinking about this with the clients I’m working with today, is that we’re working with people on behavioral change or working with people with behavioral expectations, or even thinking about working with people with mindfulness and how does that affect you going forward. And we’re even thinking about–or at least, I’ve been thinking about a field I’ve just become fascinated with called neuroplasticity which is how you rebuild neuropathways in your brain. And all of these have a financial planning component to it.

Dick:                You’re damn right. Absolutely have those components to it.

Josh:                And it’s really interesting that if you’re going to be a successful financial planner, it seems to me you’ve got to be a really curious person, if you’re going to be good.

Dick:                What do you mean by that?

Josh:                Well, you’ve got to be curious about your clients and you have to be curious about learning new stuff in the world because as you know, the amount of information doubles – I don’t know what it is, every three years now or something like that. And it’s too much to stay up with but, at the same time, you have to be sort of thinking around saying, “How can I use this deluge of information that’s coming at us to help our clients make wise decisions?”

Dick:                Yup.

Josh:                And unfortunately, the money in this industry is in the investment management – not in the financial planning and there doesn’t seem to be a lot of incentive for financial planners, as a group. Now, there are exceptions, I’m going to grant that. But as a group, it seems like the financial planners are not being nearly curious enough.

Dick:                Well, I don’t think we’ve evolved to the point where our value systems are real well set. And that we have come in to this world with two sets of motives – (1) I’m a competent investment manager, or insurance planner, or something. And the other (2) is the kind of curiosity that you’re talking about.

We can be fellow travelers with our clients or we can be sources of answers. And I have my preference, so I think that we are far more useful as fellow travelers in the road of life for our clients than helping people get the right answer. The right answer is no longer available because the complexities of the world. And it’s not in the nature of investments to have right answers.

Josh:                No, it’s not at all. And people say, “What do you think the market’s going to do?” My answer is “I don’t know. It’ll go up or it’ll go down but it’ll do both.”

Dick:                That’s exactly what I was going to say. “It’ll go up, it’ll go down and—

Josh:                Yeah. That’s about it. And if you look at the history, it tends to trend up over a long period of time, over inflation.

Dick:                But the odds of actually catching the top of the market in terms of your own use of your portfolio is pretty slim.

Josh:                And it’s an also complete waste of time, in my opinion.

So, the thing, that I think is an interesting question that planners might want to be asking a lot is, ”What would happen if—“ and I think that if we work with our clients, helping them come up with good answers to that, we’ll become enormously useful.

Dick:                I think we’re participants in the most important decisions that a client has to face. And I think filling in some of those blanks is a useful exercise. “What would happen if you got pregnant? What would happen if you lost your job?”

Josh:                Yup. “What would happen if you changed your job?” Because for most of us, not the people listening to this podcast, but the people working for them, the most valuable asset you have is your ability to earn.

Dick:                Right.

Josh:                And I don’t see enough people in the financial planning world talking about that.

Dick:                All I can say is, I think that has to change. You know, one of the things that I think is ironic is that one of the jobs that financial planners do less adequately than most of the others is investment management. There are a very few financial planners who can beat a good index fund, or three, or four of index funds. But nowhere has it ever been shown that financial planners are particularly good at portfolio management.

Josh:                Which is why they probably would want to outsource that if they were smart.

Dick:                Right. And I think that there will be new business models that emerge and that that’ll be one of them, is what different businesses do you really need to have as part of your support universe?

Josh:                We actually do outsource our investment management. And it allows us to focus on the client and not on the investments. And we hire people to work with us to do that which tends to work well.

At any rate, if I own a business and I’m going to hire a financial planner – I just want to spend a few minutes talking about this, Dick, because I think it’s really important. The reason I want to talk about it is that a lot of folks listening to the show will probably be hiring a financial planner at some point in their life.

So, if you were to give advice and, say, Okay, people are saying, “Yeah, this Financial Planning 3.0 is really interesting. It’s about me. It’s not about them. It’s about the effect of money on my family, my life and my business.” How would you recommend a business owner go out and find a Financial 3.0 planner?

Dick:                First of all, I’d find somebody who’s dealt with other people with circumstances that resemble your own – similar age, similar possibilities. Let’s take, for example, somebody who’s 63 or 64 years of age who has just figured out how to do podcasts. You need to find somebody that understands that business a little bit. And then I think affordability is probably one of the least of the issues that you’re looking at because the decisions that are being made are too important to care too much about what you’re spending on them. I would talk to people at industry events and find out who’s happy with their financial advisor and I would look for somebody that wasn’t in the “rate of return” business.

Josh:                And when you say the “rate of return” business, you mean investment management business?

Dick:                Yeah, who measures their own utility by the rate of their return.

Josh:                Oh, okay. That certainly makes sense.

So, when we talk about Financial Planning 3.0, what do you think is the most important thing about this that both consumers and advisors should be concerned about?

Dick:                I think we need to understand money better. You know, “What is money in 2017?” And it’s not an easy question. It doesn’t have ready answers. “Is money a source of material well-being? Or is money how we relate to each other and to the important decisions we have to make in life?”

Money has essentially three functions traditionally assigned to it. One of them is (1) it’s a marketplace of goods and services. Another is (2) it’s a source of accounting. And the third is (3) it’s a storehouse of wealth.

It’s my contention that the last function of storehouse of value is becoming of less importance and the greater importance is how it helps us relate to each other. And that the whole notion of “what we wish for” – and this is being recorded at Christmas time but “Peace on Earth, goodwill to men” is accomplished by nothing more effectively than through the vehicle of money. And to give it that kind of respect and to have that kind of understanding would work wonders to help us deal with each other more peacefully and productively.

Josh:                Well, that’s a great way to end this podcast, Dick.

I’m going to bet that lots of people listening are going to want to buy your book. So, how do they go about doing that?

Dick:                Well, there’s a preferred way of going to and following the instructions there. Or, through, the marketplace is established in the Amazon book department.

Josh:                Okay. Cool. So when you say what is finology? Finology is spelled F‑I‑N‑O‑L‑O‑G‑Y?

Dick:                Very good.

Josh:                Well, spelling is not my long suit but I got it right that time.

Dick:                You got it right.

Josh:                And those for you, who are still with us, I have an offer for you too. I have a one‑hour free audio CD. It’s a free audio CD that we mail to you. How unusual in today’s environment. And all you have to do is take out your smartphone and text the word SUSTAINABLE to 44222.

The one-hour free audio CD is called Success to Sustainability: The Five Things You Need to Do to Make your Business Economically and Personally Sustainable. And to get it, again, take out your smartphone and text SUSTAINABLE to 44222. You’ll get a link, click on the link, fill out your address and we’ll have the CD on it’s way to you.

You’ve been at the Sustainable Business. This is Josh Patrick and I hope to see you back here really soon. Thanks for stopping by.

Narrator:         You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at, or you can send Josh an e-mail at

Thanks for listening. We hope to see you at The Sustainable Business in the near future.

Topics: sustainable business podcast, Financial Planning, Finology, Financial Planning 3.0

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