Stepping up & out in Strange Times

richard b wagner cfp

Stepping up and out in strange times

Written in 2008 by Dick Wagner

Friends,

Events of this week and the past year have been stunning.  The media is full of analysis and explanation.  The stock market sounds like one of Warren Buffet’s famous pinball machines and clients are losing it in more ways than we can count.

I am sure most of you remember the basis for the Nazrudin Project.  When we started the Nazrudin Project, there was a dominating theme of intense self-examination and personal and professional responsibility and accountability represented by the punch line to one of George Kinder’s Nazrudin stories.  When the banker asked Nazrudin if he could “identify” himself, he responded with reflection from his mirror “Yes, that is me all right.”  Of course we pluralized it to “Yes, that is us all right” and we went out and tried to figure out what that meant for us.

For over thirteen years, our identity seeking attitude has focused on our professional relationships with individual clients.  This has had huge impacts and repercussions.  Our mutual inquiries and pioneering spirit have altered the profession.  It has put us on the path towards becoming an authentic profession.

As vital as this has been, I suggest it is unfortunately partial.  We really have not given equivalent energies to issues of our identity with respect to groups or culture.  Neither have we questioned our relationships with the financial service industry.  At the end of the day, this could be an even greater challenge to the profession than the life planning efforts.  This could put us in position to be meaningful critics and sources of accountability against the sorts of excesses that have led to these crises.

I suggest that our relationships to social and cultural money have extraordinary implications for our clients.  First, money is inherently cultural.  (i.e., The term “my money” is an oxymoron.)  But, there is more.  Is there a greater enemy of personal financial wealth health than inflation and/or systemic collapse?   Can we overstate the real-life impacts of ongoing currency devaluations?  What about the integrity of our insurance and fragile support systems?  And so forth.

What sorts of risks have we endured this week?  I would even go so far as to suggest that Step 6 of the Six-step process requires us to anticipate both the health of the currency and society’s relationships with money.

Here comes the toe-stepping part though: How should we “show up?”  I suspect most of us lay the blame for this crisis on the financial services industry.  Greed, control failures, poor derivatives management, sloppy lending practices, the bleeding heart liberals trying to get everyone into a house whether or not they could pay, the heartless conservatives ruthlessly foreclosing on poor Auntie Nell  and so forth.  Indeed, blame seems to be falling in huge drops coating any and all.  Yet, don’t we share some of the blame?  Did we act on our clients’ behalves or did we so thoroughly identify with the Financial Services Industry that we forgot to be critical of it.  Honestly, through it all of this, I have not seen or heard of anyone in this community looking into that mirror and identifying ourselves as having played a part in any way.

My question: Where were we?  Did we not see all of this unfolding before our very eyes?  Do we deserve to get some of that blame that’s going around?  Did we not have front row seats as this disaster unfolded?  When did you know it was just a matter of time?  For me, it was at least four years ago.  I may have wagged my finger a bit, but, basically, I did nothing.

I know it is not in the job description, but I’m just saying…

This is not the first time Industry’s excesses have done disproportionate damage.  When preparing for my Next Gen speech in July, I counted ten or eleven significant systemic blow-ups since I entered financial planning in 1982.  (Depending on how you count: tax shelters, penny stocks, limited partnerships, the stock market (twice: Black Monday and the dotcom bubble), “permanent” life insurance policies, Long-Term Capital, housing market (twice—mid 80’s and now), Savings and Loans and, now, subprime, etc.) They are all the same in several vital respects reflecting greed, excess, frothy valuations, “too good to be true” gains for a limited few, financial muggings of the unfortunate many, freely tossed blame and general disclaimers of responsibility by Industry.  And so it was with “The Panic of 1907” (See the book by Robert F. Bruner.  The similarities are eerie.)

At times like this, it seems to me that an authentic profession should be stepping up and being counted.  This business literally threatens money as we know it.  At the very least, we can expect significant transformations to money as we know it.  Presumably, there will be some major reforms involving government.  They should also involve us.

What is more, I suggest financial planners need to sever identification from the financial services industry.  We should be loving critics and great customers demanding high quality products but not agents and apologists after the fact.  Financial planners are not industry.  Industry has no business engaging in financial planning.  That is the whole point of the FPA v. SEC case.  It is also the whole point of embracing fiduciary standards.

So, IMHO, it is time for new conversations among us.  “Life planning” has taken us on extraordinary journeys.  I don’t have a name for what might come next—maybe “financial planning done right” will just have to continue to do.  But I think we need to be a part of this.

There are some terrific articles coming out of this.  Thomas Friedman’s Wednesday column was great.  http://www.nytimes.com/2008/09/17/opinion/17friedman.html?_r=1&hp&oref=slogin     No tears for Lehman.

David Brooks wrote a good one about regulation.  http://www.nytimes.com/2008/09/19/opinion/19brooks.html?_r=1&hp&oref=slogin   Frankly, I think it leads to some interesting thoughts about our roles as sources of meaningful control and de facto regulators (in our consumer roles).

Mainly, though, there seem to be many thinking that this will be the time seen as commencing a new era for money and those working with it.  Perhaps my favorite comes from Stephen G. Brant the Huffington Post, http://www.huffingtonpost.com/steven-g-brant/celebrating-capitalisms-d_b_127758.htm

I hope at least some of our business and political leaders are in enough of a shock that they will look for new ideas and new answers such as those I am talking about here.

We don’t have to settle for 800 pound gorilla thinking. We can innovate our way out of this crisis, with our eyes completely open to the true nature of the challenge we face… open to understanding the root cause of the challenge we face. And by understanding the root cause of the crisis we are in – that we literally see fighting as the “first principle” of living when cooperation and collaboration should be the first principle – we can design our way to a better future… to an economic system that will provide all businesses – and all the people on Earth – with more prosperity than they ever believed possible.

We must not just stop something old that is bad. We must start something good that is new.

This is a great opportunity for us to help start something good that is new.

Dick Wagner

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