While at the University of Chicago studying for his economics PhD, Rick Miller served as a teaching assistant to Gary Becker, a Nobel Prize-winning economist. Becker ran a revolutionary workshop for economics graduate students. What made it so revolutionary? It focused on family economics. Until that point, few economists thought of family members as economic actors. They studied companies, countries, and markets, but not families. Rick still considers himself privileged to have worked and studied under such an innovator.
After earning his PhD, Rick taught economics at Johns Hopkins University and then worked for many years as a management consultant. During the last 6-8 of those years, he worked in the financial services industry with banks, insurance companies, mutual fund firms, and health insurers.
The plan begins to take shape
Next, Rick worked for a mutual fund company with a large customer who wanted to design the best way to deliver financial services at a reasonable price. Rick thought that powerful financial software was the way to go, but, at the time, most consumers were uncomfortable using it themselves. He also relearned the cost and net return advantages of index funds (another set of ideas developing at Chicago and a few other economics departments during his graduate student days). The intersection of these ideas and the discovery that many financial advisors had major conflicts of interest — they received commissions to sell certain investment products — led Rick to start Sensible Financial.
The company begins
In the first year or two, after constructing an initial financial plan (using that powerful software), Sensible Financial focused on fiduciary investment management, moving clients’ investments to index funds and consulting with them on their portfolios’ progress. After a few years in business, Sensible Financial’s clients began to ask about their progress relative to those initial financial plans. That’s when Sensible added a second service — ongoing financial planning.
Sensible Financial and the Lifetime Balance Sheet
Comprehensive financial planning is more complex than just managing investments. It considers all the components in a family’s financial life. Savings, insurance, current and future earnings, lifestyle, risk tolerance, and future goals all play a part. The Lifetime Balance Sheet (LBS) summarizes the assets, debts and spending of a family throughout their lives. Using the LBS, the financial planner considers variables like children who need tuition money, a couple who need a new roof, and parents who need help in retirement. The financial planner thinks ahead, acting instead of reacting to changes both within the family and in the financial landscape.
This emphasis on long-term, comprehensive financial planning and the family as an economic unit is what makes Sensible different. It also harkens back to ideas that had been percolating since Rick Miller’s graduate work with Gary Becker.
It’s been twenty years since Rick Miller started Sensible Financial. In that time, the firm has grown from one financial planner to more than a dozen professionals, educating clients, building financial plans, managing portfolios, and helping families with most aspects of the financial side of their lives. Sensible’s growth has reinforced Rick’s dedication to learning, teaching, and helping his clients make the most of their financial resources.