Most people see the value of financial planning as a one way street, driving up the investment lane. Return on investment (ROI) is defined as the benefit to the investor resulting from an investment of some resource. ROI has traditionally been the formula used to evaluate the effect of financial planning, but from a holistic financial planning point of view this method could be fairly one dimensional. A person’s life has so many components and in context of goal setting can’t be measured by a single return metric.
Ultima defined a meaningful life as achieving goals in three main areas namely: Purpose life, Living life & Health life. But how do you measure a client’s return in all these vast far-reaching areas? Return on life (ROL) is a new concept and although hard to measure is a great way of ensuring that all areas of life are evaluated as part of the financial planner.
Mitch Anthony suggests six key areas of financial planning to ensure achieving great ROL:
Organization. Bringing order to your financial life, by assisting you in getting your financial house in order (at both the “macro” level of investments, insurance, estate, taxes, etc., and also the “micro” level of household cash flow).
Accountability. Following through on financial commitments, by working with you to prioritize your goals, show you the steps you need to take, and regularly review your progress towards achieving them.
Objectivity. Bringing insight from the outside to help you avoid emotionally driven decisions in important money matters, by being available to consult at key moments of decision-making, doing the research necessary to ensure the client has all the information, and managing and disclosing any of our own potential conflicts of interest.
Proactivity. Anticipating your life transitions and to be financially prepared for them, by regularly assessing any potential life transitions that might be coming, and creating the action plan necessary to address and manage them ahead of time.
Education. Explore what specific knowledge will be needed to succeed in any situation, by first thoroughly understanding your situation, then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice.
Partnership. To help you achieve the best life possible but will work in concert with you, not just for you, to make this possible, by taking the time to clearly understand your background, philosophy, needs and objectives, work collaboratively with you and on your behalf (with your permission), and offer transparency around our own costs and compensation.
A really good quote that a local captain from Fiji lives by is, ‘May your memories live up to your dreams.’ That’s what the return on life philosophy is all about… filling up the memory chests of great experiences and building a meaningful life.
Blog by Hendri de Klerk
Sources – Mitch Anthony & John Greathouse (Forbes)
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