Uncharacteristic FPA Call To Raise The Federal Debt Ceiling Misses An Opportunity

Wednesday, July 20, 2011 05:47
Uncharacteristic FPA Call To Raise The Federal Debt Ceiling Misses An Opportunity

The Financial Planning Association rarely if ever takes a stand on political matters, so it was a surprise to see that they'd issued a short statement looking for a federal budget deal in Washington.

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Parts of the statement seem a little strained. Surely "a serious challenge to financial planners and their clients" would be just the tip of the financial iceberg if the Treasury were forced to default on its obligations.


And higher interest rates on car loans might ultimately be a small price to pay, compared to what an interruption in Social Security would do to millions of seniors who depend on that monthly check.


That said, the FPA could go further to treat this very high-profile near-crisis as a teachable moment that subtly reinforces both planning principles and the role of the planning profession.


The statement alludes to this by noting that "No financial planner would advise a client with a debt problem to get a larger line of credit without having a commitment and a plan to address the underlying problem."


While the federal government is no ordinary high-net-worth client, the FPA's best minds might be able to help figure out a planning-oriented solution -- or at least a process for uncovering one.


There is also an opportunity here to apply the government's situation to the cash flow problems that middle-class Americans face. Are there any lessons here for households trying to balance their priorities and manage their obligations?

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