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Futurist or Just a Good Planner?

A recent article in the Wall Street Journal touted the growth in importance of futurism, citing its role in large businesses making decisions today about process, products and policy far into the future. I guess the new year is a good time to revisit this approach, which is one that some much smaller businesses have been engaging in for decades – futurism being central to good financial planning.

Stepping back for a moment, futurism in the sense of these discussions does not mean predicting the future. The lack of a dependable crystal ball has made predictions a risky and dangerous activity for any business or person. Rather, futurism is focused on looking beyond the most basic expected path for events: whether they are individual, business centered or even global in nature. It examines the possible events that might affect planning and makes sure the client (again, whether a business, individual, government agency, whatever) is in a position to reasonably deal with the actual future events.

Though the article spoke to the issues as if this was something new to the rest of us, in point of fact planning for different potential patterns of events in a client’s life has been central to financial planning for a long time now. Though a client might be convinced that they will work up to a specific age and then retire and want a plan that shows how that may play out based on their current income, savings, investment style and so on, reality often causes a change in direction. We commonly include planning scenarios that address the early death, divorce, or disability of a client, job move or loss, changes in tax laws, receipt of an inheritance, even lottery winnings if that is a consideration (and for some clients, apparently it is).

What these scenarios help us with is how we (adviser and client) will be able to handle major changes and make sure we stay true to the client’s basic goals and approach. Key here is flexibility in our planning and an understanding of what demands – detriments and benefits – the changes will place on the client’s plan. That is why we continually monitor and adjust a client’s plan since that first version of the plan cannot be the last: since life is not static, planning cannot be static either.

It is good to know that the value of this approach is being recognized and are glad to be a part of it.


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