Executive Summary
While financial planning has been increasingly engaged in public policy discussions through the Financial Planning Coalition, those interactions have still been largely "selfish" - i.e., pertaining to the regulation of financial planning and financial planners - and have not been regarding broader public policy issues, such as the general fiscal health of the country. On the one hand, it can be difficult for membership associations to take part in difficult public policy conversations when the common bond of membership is professional, and not political; in other words, there are both Republicans and Democrats amongst financial planners, and even if we all agree on the nature of the problem, we may strongly disagree about the appropriate solution, and advocating one path over another can alienate members. Nonetheless, it still seems to me that we could play a more active role, especially in today's environment, by utilizing the unique perspective of financial planning to help make major issues relevant at the personal level.
The inspiration for today's blog post comes from a video recently sent to me by Advisor Perspectives Founder and CEO Bob Huebscher, which was released a few months ago to help communicate the issues of debt limit to the general public. The short video, which can be viewed below (it runs about 3 minutes), boils down the Federal debt limit into the context of a single family, using the actual numbers from the debate, simply adjusted with fewer zeros.
As I watched the video, all I could think was: "Wow, I wish this had been produced by the financial planning profession." In a few short minutes, the video translates a weighty public policy issue into something the average household can understand; to the extent any jargon is used at all, such as "debt limit", it's only to emphasize the satire. I suspect a lot of people who didn't really understand the whole debt limit debate of 2011 would have a radically clearer picture after just 3 minutes with this video; and the key was translating the discussion into the terms of household cash flow. The terms WE as financial planners use every day with clients.
Which means there is an opportunity for financial planning to have a voice in at least some public policy debates, simply by helping to make the issue itself more tangible and relevant for the public. Notably, the video doesn't particularly emphasize any solution, except to mock the absurdity of solving a debt problem by kicking it down the road to the next generation. Similarly, I don't think that we as financial planners necessarily have to come up with a definitive solution to the problems of the day; merely helping people to understand the problems that are out there, in terms that are more relevant, still serves a valuable role. And in the process, we do have the opportunity to implicitly show the value and importance of financial planning, itself; does anyone watching the video doubt that the poor borrower illustrated there could really use a good financial planner!?
Of course, a video isn't the only option. The Committee for a Responsible Federal Budget has a game you can play called "Stabilize The Debt", which forces you to make the hard decisions necessary to balance the budget, illustrating the choices inherent in cutting expenses or raising revenue - again, a striking parallel to the decisions we try to illustrate as financial planners about the ramifications of one's financial decisions. Or this incredible game called "Spent" that poignantly illustrates the challenge and experience of trying to make your money last to the end of the month when you're unemployed, and the difficult decisions and trade-offs that one faces.
In the context of our country's fiscal health, the connection to financial planning is really quite simple; one of our core principles is that spending decisions entail tradeoffs, which is something that virtually everyone intimately understands at a personal level because everyone experiences it in their day to day lives (whether they realize it or not). But we as financial planners are uniquely positioned to translate the wider public policy issues of the day into financial planning terms and experiences that people can relate to, elevating and advancing the public dialogue, while simultaneously helping to promote the virtues of financial planning itself. And we can do so even while avoiding (at least for the most part) a position that advocates a partisan solution that may alienate a portion of the politically heterogeneous financial planner population itself.
So what do you think? Should financial planners have more of a voice in public policy? Is this kind of public education - through videos and games - an effective way to communicate a message? Could this both elevate the importance and relevance of financial planning, along with our country's debates on certain public policy issues? Is this a direction that membership associations like the FPA and NAPFA should direct some of their resources on behalf of their members and the profession at large?
Mike,
We have been discussing, and continue to discuss, this very issue in our FPA Government Relations committee here in NJ. We have not come to a conclusion as of yet, but our Chairman (Bill Straton) is of the mind that we should be involved in these public policy debates. Thank you for your post as it helps to bring clarity to my mind. I agree, it is difficult to remain politically agnostic. However, we may be able to play a role as professionals and representatives of the Financial Planning Association in interpreting the arguments in lay terms, and educating the public.
Well done and valuable video. Public must be aware that there are major issues to be resolved. However the debt is a symptom of political and educational paralysis and stagnation. And that’s where a true solution can arise from.