George Kinder
Kinder Institute
George Kinder wants everyone to be free.
At first glance, the idea of personal fulfillment or enlightenment may seem more suitable for the realms of religion or spirituality than personal finance.
But Kinder, recognized as the father of the “life planning” branch of financial advice, has been advocating the connection between finance and freedom for years.
In fact, his new book — “The Three Domains of Freedom” — delves into this topic.
“There are types of goals that are deeply inspiring to clients,” Kinder, who founded the Kinder Institute of Life Planning in 2003 after a long career as a financial planner and tax advisor, said in an interview.
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He is perhaps best known for his “three questions,” which aim to help people uncover the essence of their life goals.
“If you identify those and really paint the picture of what [someone’s] life would be like if they actually had that life, clients are on fire and they solve the financial problems pretty quickly and easily,” Kinder said.
CNBC spoke with Kinder about life planning and why he believes many people miss the point when it comes to managing their money. This interview has been edited and condensed for clarity.
‘You should be focused on your dream of freedom’
Greg Iacurci: What is the basic premise of the life planning movement?
George Kinder: The basic premise is that financial planning is about delivering a client into freedom. Every person has a dream of freedom, and they ought to be living it. And that goes for people who don’t have any money, people who are in debt, as well as people who have lots of money.
The focus shifts from money — where we have a lot of anxiety and there are a lot of tasks to do — to freedom. What does it actually look like, feel like, and what are the steps to get there?
GI: What do you mean by freedom?
GK: I think each of us has our own feeling for it, and the way we get at it is through the three questions.
If people just focus on the money, they lose track of who it is they really want to be and what it is they want to do. And often they assume, “Maybe I can’t do that until retirement, or maybe I’ll never get there. So I don’t really want to face it. I’ll just try to be more efficient around [my] money.”
The premise of life planning is, no, you should be focused on your dream of freedom, and do some of these exercises to discover what it is. And then you’ll find that the money side of it goes much smoother, because it doesn’t feel like an onerous task.
‘People get lost in the daily stuff’
GI: You think people are blindly saving money or trying to amass wealth without really considering what it’s for?
GK: Everybody I’ve met does that. This is endemic across civilization. People get lost in the daily stuff of it, and they don’t have a structure. Without really having that dream of freedom, the [financial] tasks are tough to follow.
GI: The three questions help underline what is most important to people and what they want to do with their life — it gets them thinking about how they might apply their money to furthering those goals?
GK: Exactly. It puts your eyes on the prize. People don’t know what they’re aiming at, really. I think they end up aiming at things that they read in financial journals or The Wall Street Journal or personal finance blogs. They’re thinking that they’ve got to just fix their IRA and do more budgeting. They get lost in that rather than always keeping their eyes on, “OK, this has a reason, and the reason is that I want to live this kind of life, and if I do these things [then] I can get there, and get there in relatively short order.”
George Kinder
Kinder Institute
GI: But that’s not necessarily to say that the way that people are saving is wrong, right? You hear these rules of thumb, like you should be saving at least 15% of your income towards retirement. You’re just saying to question why you’re doing that?
GK: It’s not wrong. And moreover, if you read good advice columns, or if you’ve read books or you have an advisor, you’ve got a pretty good bead on how to save and how to invest and all of that. So it’s not wrong. But the focus is off, so that you’re lost.
You said, “saving 15% for retirement.” Well, why are we using the frame “retirement”? What I would argue is a much, much more potent and appropriate term for every human being is “freedom.” And freedom might happen in a year, it might happen in six years. It doesn’t necessarily have to time with what we normally think of as retirement.
GI: Basically, don’t necessarily put off your goals and ambitions until you retire.
GK: Exactly. When we look at these things, we look at, how can we make this happen very, very shortly. Usually by “very shortly” I mean sometimes it’s within a matter of months, and is almost always within a matter of three years, and is usually…
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