I have received some feedback that said that behavioral economics and process mapping did not have a link that impacted on the low and lower middle income members of the community and their efforts to grow assets nor maintain asset levels in retirement years.
This feedback concerned the issue whether their existed a need to integrate lifestyle planning with financial planning. The argument was that the two are two separate issues as lifestyle planning was about values and what clients thought were important in their lives and what they hoped to achieve, particularly in retirement and financial planning was about funding. However, this appears to ignore the fact that people engaged at an operational level and those that work with them are busily discussing how they can better help those low and lower moderate income members of society by managing investment risk better.
This situation has arisen because policy makers have failed to see the link between behavioral economics and process mapping and the need for an innovation forum. In short, congratulations CFED! The paradigm shift has started.
An important event has happened at the 2010 Assets Learning Conference, the question has been asked as to why people act against their own best financial interests. Critical work is being carried out in applying behavioral sciences to encourage less advantage and lower middle income people to build assets. It is only a short journey to ask the question as to whether the process mapping of financial services providers aligns with the goal of encouraging people to build assets.
Around the world financial planners and other financial service providers are participating in professional development training that is looking at similar subjects such as:
-the need to move to Lifestyle Planning as well as Financial Planning.
-revisiting portfolio construction to better manage investment risk
-changes in investor behavior post the Global Financial Crisis
-what is Fiduciary duty and what is its impact
-whether insurance risk management products shouldn’t have minimum opt out standards for public offer retirement savings products
There is an opportunity here for CFED not only to help change the process of providing services to clients so that they can better understand the importance of building assets, but protect people at they do so during their lifetime. This is not only in the United States, but throughout the world.