Financial Planning for Creatives

[Evie B]

I thought that this post would be a good topic to blog about in light of the economy (which, incidentally, I don't pay too much attention too).

Today, we are going to talk about Financial Planning. Yes Financial Planning. Financial Planning is not just for the rich, famous, or those who have lots of disposable cash. Financial Planning is for everyone who touches and uses money (& unless you barter your entire existence, I am pretty sure that that means you).

The challenge with financial planning is that its image is not one that is very friendly or open to most people. One of the major things that people DON'T like to talk about is MONEY. Yet, money is one of the largest things that impacts us and impacts our ability to live life and fulfill our dreams.

When I was going through the financial planning certification program, one of the things that struck me most, was the fact that the advising techniques were geared towards (1) folks with a lot of money (2) seniors (3) families with children and (4) young professionals with jobs. What was missing from the equation was financial planning advice for entrepreneurs, and more specifically, financial planning advice for creative entrepreneurs, solo-preneurs, inner-preneurs and others who are on the self employed off the beaten path AND advice for those who are in what I like to call, Financial Recovery. This is one of the main reasons why I chose to focus the services provided by on creative entrepreneurs.

How and why would financial planning advice differ between parties? Well each client type has a different set of needs. For example, a plan for seniors would focus on strategies that protected their assets against inflation and maintained the stability of principle. A plan for a family would include strategies for retirement, along with strategies for education funding. A young professional would require a plan that might eliminate debt, create an emergency fund, establish a savings plan for a down payment on a house, and build an investment portfolio.

All of these strategies are great and they make sense. In some aspects, they might even apply to a creative professional. But what happens if your source of income is not stable? What happens if your cash flow is not very predictable for the first few years? If you are funded by grants or work off of art sales commissions, consignment sales or jewelry sales? What happens if you just have fundamental issues with money, and you cannot reconcile the natural tension between creativity vs. commerce?

I find that with creative entrepreneurs, because the personal income = the business income, in order to create a plan that is relevant to them, it is important to also (1) account for the variation in cash flow (2) understand the creative process of each client and build that into the plan (3) understand the personal and business goals of the client and how they are inter-twined and (4) engage in a business and strategic planning process that focuses on helping the creative entrepreneur maximize their talent, while maximizing their sales.

So you have read all of this and are now quite interested in working with a financial planner. Great! Now, What are some of the things that you look for in a financial planner...or what I like to refer to myself as, a "personal financial coach". There are a whole rack of lists, and Do's and Don'ts on the internet. One good source can be found at the CNN Money website under Lesson 15- How to Hire Financial Help. In addition to all the great advice that is out there, you want to find a planner with whom you can develop a GREAT working relationship with them. Someone who understands what it means to be a creative entrepreneur and someone who will also hold you accountable so that you can reach your goals.

It might be also beneficial to consider the services of a financial coach before you visit a financial planner. What's the difference between a coach and a planner? Well, it really depends on the service provider. Someone who is strictly a planner may stick to the 6 step financial planning process and will actively manage your financial assets. Financial Planners are paid on either a fee-only basis, a commission basis, or a combination of fee +commission. A Financial Coach is more concerned with helping their clients master their relationship with money..helping their clients create a positive relationship with money and helping their clients enhance the "stickiness" factor of their money. Some coaches are trained as life coaches or spiritual counselors, and they happen to specialize in money. It is helpful, however, for the coach to have a good understanding of financial planning techniques.

Ok, now that we got past all of the philosophical stuff, what happens when you engage a financial professional? When a client decides to work with a financial planner, these are the 6 traditional steps that a planner uses. This is typically referred to as the "Financial Planning Process":

1. Establish and define the client-planner relationship.
2. Gather client data, including goals.
3. Analyze and evaluate the client's financial status.
4. Develop an d present financial planning recommendations and/or the alternatives.
5. Implement the financial planning recommendations.
6. Monitor the financial planning recommendations.

If you choose to work with a financial coach-what happens really depends on their coaching process. For me, as a trained and certified financial professional, I use a combination of the traditional process, along with a the 4-pronged process I created specifically for the clients of EAB.

Obviously, I can go on about this topic for a number of post (but I won't). Hopefully this post gave you something to think about. If you are interested in learning more, I am co-sponsoring a workshop with Sharon Burton of Authentic Contemporary Art at Artomatic entitled: Financial Planning for Visual Artist. This workshop is actually open to all creatives, and is being held on Thursday, June 25th from 7-8pm.

Hope to see you there!