The Agile Financial Planning Manifesto


Way back in 2001, a group of 17 leaders on the cutting edge of software development met at a ski lodge in Utah. They came to exchange ideas and discuss the common issues of trying to develop quality software in the corporate environment. Out of it came the Agile Manifesto (it is awesomely ironic in how that site screams 2001). The four tenets read:

  • Individuals and interactions over processes and tools

  • Working software over comprehensive documentation

  • Customer collaboration over contract negotiation

  • Responding to change over following a plan

Fast forward to today, Agile Development is everywhere. Companies large and small continue to bring in consulting groups dedicated to training their IT department on agile software best practices. Product Owners, Certified Scrum Masters, Planning Poker, backlog grooming, chicken & pig analogies… these are things we are saying. At work. As adults. Don’t get me wrong, this re-definition of how to go about developing software solutions has been a welcome one. Team members are more engaged, and customers are more satisfied. The methodology has been able to adapt with the fast paced nature of the IT industry.

I would argue that financial advising is a world that is also changing rapidly and could use some new ideas. Customer satisfaction and trust are a a huge hurdle. Believe me, when I’m in a social setting and I tell someone “I’m a financial planner”, that’s not a real party starter.

What if we applied the Agile Manifesto to the financial advising industry?

Individuals and interactions over processes and tools

One key thing to point out for married couples is that “Individuals” means BOTH spouses. More often than not, one is more engaged in the numbers while the other would rather do anything else than talk about money. Dave Ramsey refers to these two roles as the “nerd” and the “free spirit”. It’s easy for a financial planning engagement to be primarily a conversation between the planner and the nerd, leaving the free spirit to sit idly by. But in emphasizing individuals and interactions, we are telling the free spirit:

  1. you’re not getting off that easy, and

  2. you’ll enjoy it more because the focus is on you, not your money.

Money is very personal and has a lot of emotions wrapped into it. No one wakes up one morning and says “I’d like to talk to someone about all of my money issues”. It takes a lot of courage to reach out for help, and it generally means there is a pressing need. Imagine that you’d like to talk to someone about how to tackle a mountain of debt and your child getting ready to start college, and you’re met with “first we’ll need to discuss moving your current investments and look at your insurance needs”. Processes and tools are important, but not as important as the individuals that they are designed to help.

Working software over comprehensive documentation

What do I mean when we’re talking about working software as it pertains to personal finance? In IT, working software is a deliverable product that adds value. It is constantly evolving and improving with each iteration. So in financial planning, working software equates to the value that is being added to your life. Obviously, that would include the real added monetary value of a well designed investment strategy. Added value also comes in the form of stress relief, empowerment, living a life that aligns with what’s important to you, and many others that I classify as “quality of life” improvements

Just as in agile projects, the documentation still plays an important role, and sometimes it’s simply required. Financial Plans, Investment Policy Statements and Investor Risk Profiles all are necessary and highly valuable documents. But having a pristine copy of each of those documents means nothing without the actions that they outline.


Customer collaboration over contract negotiation

I’ll be honest, I am not a great negotiator. I’m just not cut from that cloth. When I think of the best way to begin a healthy planning relationship, I don’t think of “contract negotiation”. So to address that problem, it was obvious to me that clearly stating my pricing was the best way forward. Financial professionals need to be transparent about how they’re paid, which goes back to the issue of trust. The vast majority of financial advisors do not make their fees publicly available, and it’s a sad statement that transparent pricing is a differentiator!

Another reason to emphasize the importance of having a collaborative relationship is so the plan that is created is truly YOUR plan. We are not all the same. We don’t have the same aspirations, careers, challenges and in-laws. So if you are going to bring in a financial planner, you want to make sure that planner takes the time to understand who you are, where you’re coming from and where you want to go.

Most importantly, you as the customer need to have full confidence that the advice you are receiving is always in your best interest and your advisor is sitting on the same side of the table. Once you can let your guard down and have that trust, that’s when true collaboration can happen.

Responding to change over following a plan

It’s ironic that someone holding themselves out as a “financial planner” would go along with this.

First, let me clarify what I mean as it pertains to the stock market. I can guarantee you that it will go up. I can also guarantee you that it will go down. Do I know when it’ll go up? No. Do I know when it’ll do down? Nope. Those that believe they can predict the ups and downs of the market engage in a strategy that is called “timing” the market. Not surprisingly, statistics show that it doesn’t work.

On the other hand, investing (and staying invested) over long time periods has shown to yield positive results. So how can you take advantage of that in a methodical way?

  1. Determine how much risk you need to take (Risk Capacity)

  2. Determine how much risk you are willing to take (Risk Tolerance)

  3. Determine what mix of investments best suits your needs and fits within the risks (Asset Allocation)

  4. Create a written investment plan, understanding the level of ups and downs that you are taking on (Investment Policy Statement)

Taking these steps will help you not act irrationally when the news starts rolling in that the market is crashing and “this time it’s different!”. Easier said than done, I know.

Now that we’re clear on that, what types of changes are we talking about.

  • Job change / Promotion

  • Having a baby

  • Child going off to college

  • Buying a new home

  • Death in the family

  • Divorce

  • Disability

Or simply put, LIFE. Think back 10 years from today. Did you have the same priorities? Did your situation look the same? Probably not. So chances are that a plan developed for the you from 10 years ago would no longer apply to the you of today. Agile financial planning is designed to quickly respond to these changes, and evolve with your life.


The original group that met in Utah created 12 Principles behind the Agile Manifesto. No, I’m not going to go through each of those as well. But I think the first of those principles nicely sums up the essence of agile financial planning

Our highest priority is to satisfy the customer through early and continuous delivery of value.