Case study: Everyone needs life planning

Michael Fairweather CFPTM Chartered MCSI, founder of Real Life Financial Planning, provides an insight into the life planning process

life planning
The brief

Michael Fairweather CFPTM Chartered MCSI

After spending ten years as a financial planner in London, Michael began to think about a change of career. He attended an IFP London branch meeting in 2008, where George Kinder presented on his approach to life planning.

Michael was inspired to sign up for a short training course, followed by residential training and a six-month mentorship, to attain his Registered Life Planner qualification.

Michael moved to Edinburgh in 2011 to set up Real Life Financial Planning, which is built around George Kinder’s teachings.
A young couple, Amy and Alex (not their real names), came to see us with concerns about retirement planning. As is often the case, these concerns were transformed into an uplifting life planning experience.

Amy was a vet who wanted to retire at age 65 and live in comfort. She had some money in a personal pension. Alex was a physiotherapist with 18 years’ worth of a National Health Service pension. They were living in a big old house that needed constant repairs and improvements, which was becoming a drain on their finances and time. Amy was working full time plus running her own private limited company, and felt that she wasn’t spending enough quality time with her husband.

There wasn’t enough time for her passion for outdoor sports, and holidays were limited to the UK in a campervan, which they enjoyed but were keen to travel further afield with the children in the future.

They weren’t keen on the local state schools, so school fees for two young children were a big part of their plans.

Alex’s main priorities were to find a new job that was challenging and stimulating and to feel more financially secure. He was also keen to become thinner and fitter.

The plan

The sort of personal details provided by the couple at the initial meeting emerged as part of the life planning process, which focuses on what clients want from life, rather than just on their money. George Kinder, father of life planning, has a five-stage process called EVOKE (Exploration, Vision, Obstacles, Knowledge and Execution). Knowledge is the financial plan and Execution is the implementation of the financial plan, so it is the first three stages that make up life planning.

I began by asking them if there was anything urgent they needed to achieve. A few answers about pensions and insurances came out. I then asked the more important question of “What would you like to see happen as a result of us working together?” and practised the art of active listening while the information came out. When they reached a natural pause, I kept quiet, allowing them time to reflect, which enabled them to soon pick up the narrative of identifying their life goals without interruptions from me.

Once I had a clear grasp of their life goals I moved on to their finances and established what we had to work with.

The second meeting was all about inspiring Amy and Alex about their dream future lives. George Kinder explains that life planning exercises, such as visualising the future under different scenarios with three questions, and deciding where you want to be within specific timeframes, help establish what is truly important to the client. Then the life planner’s job is to filter this information and feed it back to the client in the form of a statement that presents the client with a vision of their dream future life – Kinder calls this the ‘torch’ statement.

In Amy’s case, the statement became:

“If as a consequence of our work together, we were able to deliver to you a life where:

You have more quality time with your husband rather than him always being at the back of the queue behind the kids and your work.

You live in a house that isn’t falling apart. You have managed to get the necessary work done to your home so that it is damp and rot free and is looking good. You no longer have massive bills and you have managed to accumulate some spare cash as an emergency fund.

You feel less tied up with work, and have managed to sell your business for a good price.

You are spending more time with your friends. You are also spending more time and being more patient with your family.

You are travelling more, doing trips with the kids in the campervan in the UK and Europe and are starting to plan your first long haul family holiday where you can afford to choose between the Grand Canyon and Yosemite, Chile, the Himalayas or a safari in Africa.

How would that feel?”

Getting this statement right tends to elicit emotional responses and it’s easy to tell that you’re on the right track when their faces flush and their eyes light up.

The Vision meeting with Amy and Alex concluded with me encouraging them to continue visualising their dream future life with other life planning exercises called Ideal Day, Ideal Week and Ideal Year, and to consider the question: “What could possibly stop you from having all of this?”.

At the third meeting we focused on getting all their obstacles down on paper before resolving them. The standard phrase is: “I have some ideas about how you could go about resolving these obstacles but how would you solve them?”

Amy and Alex were therefore encouraged to come up with their own solutions, which is one of the best bits of life planning, instead of an ‘expert’ financial planner telling them what they should do. They came up with all the big decisions themselves, including:

  • Amy taking a new job with excellent salary and benefits package.
  • The whole family moving from Scotland to England for her new job.
  • Buying a new house using the government Help to Buy scheme.
  • Selling her private limited company.

Knowledge and Execution
The financial plan and its implementation involved:

  1. Transferring Amy’s existing personal pension and advising her to stop making personal pension contributions and start making employer pension contributions instead from her private limited company.
  2. Advising her to stop paying herself a salary from their private limited company. 
  3. Transferring some of her shares in the business to her husband for tax efficiency of dividend income.
  4. Advising her to apply for replacement life assurance, family income benefit and income protection insurance.
What happened next

Fast forward three years and they are settled in to their brand new home. The local state schools are excellent, which has lifted the burden of future school fees. They’ve completed the sale of their limited company.

Alex is now three stone lighter and has taken a position as school governor. He has started building up his own private physiotherapy practice and feels they now have sufficient financial security to be confident about their future and free to pursue their dream lives.

This article was originally published in the Q3 2018 print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.
Published: 17 Sep 2018
  • Financial Planning
  • Case study
  • life planning
  • George Kinder

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