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Planning or Consequences

You have to be a historian to realize that America is at a turning point in its history.  Our country’s leadership is walking away from the globalization vision that America created for the world out of the ashes of World War II, and the handwriting is on the wall for America to lose its economic leadership to China, and perhaps also to India, Japan and Europe.  We are entering a new cold war with Russia in an era of terrifying new cyberweapons.  Allies are enemies, enemies are allies, and truth is whatever you want it to be.

This is not doom and gloom; it’s a clear extrapolation of today’s trends, and of course it saddens me, as a proud American and proud citizen of a world that once seemed more peaceful, increasingly democratic, and more accepting of each other.  But I also feel that our profession has a role to play in salvaging the situation here at home, and perhaps in the world at large.

The rising anger that I see everywhere these days seems to me to be a product of frustration, a feeling of being left behind, perhaps of being ignored.  I have old high school friends who are now on Facebook, and you can divide them neatly by economic class.  The kids who knew they were never going to college, who lived firmly blue collar lives, who were mostly interested in souping up the engines of their cars and getting drunk on the weekends, who ignored their homework and took an hourly job right out of school, are inevitably the ones who are now embracing things like QAnon, white nationalism and hatred of globalism.  Back in the day, some of these people were bullies, but most simply put consistently negative social pressure on the whole idea of using your high school years to learn the facts of the world.  They scorned those of us who studied and worked for better grades, and in retrospect, they were clearly giving themselves the perfect education for a world where the truth is whatever the heck you want it to be.  I used to be able to talk with them, but now I wonder if we would be able to communicate at all.

But here’s the thing: I don’t think they’re wrong to feel frustrated or excluded.  In 2007, the top 10% of households owned 81% of the stock market.  Now they own 84% of it.  The wealth of the median American household is 34% below where it was just before the Great Recession.  People ARE being left behind, and is it any wonder that they’re acting out and expressing anger at what they regard as a patronizing attitude from the people who prospered?

What can we do about all this?  The people who were left behind, in my experience, were the least likely to seek out educational opportunities, but even so, they benefited from an American prosperity that needed unskilled labor and was willing to pay for it.  That is increasingly less true as we move forward with new software, artificial intelligence and robotics.  It is less true when people overseas are willing to work for less, where their pay scale, below the American one, represents a raise over what they had been earning before.

These untrained Americans were also left out of financial planning advice.  Financial planning firms increasingly have gravitated—understandably—toward that upper 10% of households, whose needs are complex, but who also have the means to pay well for advice.  The wealth disparity is also an information disparity; some people know more about the value of saving and investing than others.

I believe that if more people had more access to financial advice, in their own interests, more people would be able to take a realistic look at not just their financial situation, and how to participate in the engines of wealth in the American economy, but also their skillset in a changing world.  Financial decisions have a way of being right or wrong in a way that’s hard to dismiss or argue away.  Meanwhile, the path to prosperity is probably going to be more open again than it has been over the past few years.  America is about to experience an extremely tight labor market.  Many workers are not trained for the jobs of the future—and they don’t seem to know where to start retooling themselves.  They could use some good sound advice.

Will increased access to financial planning advice and services—albeit under a different revenue model—end the absurdities of QAnon or the cruelties underlying racial hatred?  I actually believe that it’s a better start than a lot of things I hear proposed.  When the profession whose mission is to help people enjoy a prosperous, fulling life tells 90% of Americans that they “don’t qualify” for its services, it adds a lot of fuel to the existing blaze.

The change, of course, is already happening; particularly among Gen X advisors who provide services to their unwealthy friends and colleagues.  Financial planning is ultimately only a piece of the puzzle that will unravel some of the dysfunctions of our society.  But I think it may not be the smallest of them.