Over the past few years, several books have delved into “life planning” — the new paradigm for many financial advisors. Roy Diliberto’s book, Financial Planning — The Next Step: A practical approach to merging your clients’ money with their lives is one of the most recent and one of the best.

Diliberto’s book is being touted in e-mail messages and at events by the international Financial Planning Association, along with the latest book from George Kinder (Lighting the Torch: The kinder method of life planning), the person largely responsible for the popularity of life planning as a methodology for financial advisors.

You might expect the former book to describe how Diliberto, a highly regarded industry leader, implemented a life planning strategy in his practice.

And that can be found in the first two-thirds of the book.

But it is Chapters 10 through 15 that make the book even more worthwhile.

Let’s begin, however, as they say, “at the beginning.” Chapter 1 asks, “Who is your client?” and concludes that, for a life planner, it is definitely the people, not the money managers or life insurance companies whose products they may represent, nor is it the firm that sponsors their licence.

Life planners’ clients are the people who seek counsel from advisors to sort out their financial affairs. As obvious as that may seem, a truthful answer to the question has many implications, from the process to be followed, through the compensation arrangement and on to the service commitment. The process, for example, has to help the advisor really understand a client’s history around money, personal values, attitudes and goals in life before making recommendations.

But doesn’t every conscientious advisor do that? The answer, hopefully, is yes. However, the life planning approach takes fiduciary responsibility to a much higher level.

In Diliberto’s practice, for example, both spouses in a prospective new-client couple are asked independently to complete a “financial life checkup” regarding their feelings about specific financial aspects of their lives and bring it to the initial meeting — no other financial records are required. That first session starts with a “tell me about yourself” open-ended conversation that precedes the review of the financial life checkup, which begins with recounting positive experiences around money, followed by negative ones and concerns.

After listening to prospective clients share their stories and feeding back to confirm understanding, Diliberto will then describe how his firm works, what clients can expect and how he will go about assisting them.

This dialogue always includes a comparison between measuring the success of a money manager (superior investment performance) and a life planner (the extent to which a client’s emotional as well as financial needs are met).

If the prospect is philosophically aligned, the advisor describes the fees and outlines the next steps. The client is given three additional questionnaires to complete: “Dreams, visions and images for use of wealth” (Kinder); “Defining true wealth”; and a “life transitions profile” (Mitch Anthony).

Again, no financial information is yet required. It is not until the third and fourth client meetings that the technical and quantitative aspects of financial planning and the resulting recommendations are introduced.

Chapters 4 through 9 walk more thoroughly through each of the steps described above. We are given numerous examples of questions to ask clients at each stage, including Kinder’s “famous three,” which are paraphrased here:

> If you had all the money you would ever need, what would you change?

> If you knew you had only five years to live, what would you do with the time you had left?

> If you knew you had only one day left to live, what would you wish you had done in your life?

Diliberto describes investment strategy, estate planning and philanthropy conversations in these chapters, often with specific reference to U.S. tax laws and planning opportunities; however, there is certainly sufficient universally applicable material to make the content valuable.

As noted, Chapters 10 though 15 are a bonus because they detail more completely the operational aspects of a successful life planning practice. In fact, with a little expansion, the topics covered here could stand alone as a guide to any advisor, regardless of their approach to doing business.

Chapter 10, for example, is labelled “marketing,” but it is really about building a reputation for client service that is so strong that there is little need for direct marketing because clients will eagerly and consistently introduce you to prospective new clients.

@page_break@There are also chapters that deal with organizing your practice to support your business model, including finding, training, motivating and compensating your support team.

On the management side, Diliberto describes how the partners in his firm share responsibilities and are rewarded for their individual contributions.

And, finally, the concluding chapter is a reminder to “practise what you preach”: if you are going to advise clients to seek first to satisfy their life goals and then align their financial affairs to achieve them, you must do the same with your own life and business.

Financial Planning — The Next Step delivers on its promise. It is highly recommended. IE