The Secret to Closing the Behavior Gap in Financial Planning

In this clip from episode 75 of Kitces & Carl, Carl Richards and Michael Kitces discuss the importance of a Statement of Financial Purpose in successful financial planning.

Carl explains how this living, breathing document serves as a touchstone and reminder for clients to stay true to their financial goals, even in the face of market volatility and emotional decision-making. He shares his journey of trying different strategies, such as facts and figures and goals-based planning, before finding that a Statement of Financial Purpose was the key to closing the Behavior Gap.

The document is not meant to be filed away but used actively, with Carl emphasizing the need to actively look for disconfirming evidence and embrace errors.

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