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Why Real Planning Is Ongoing Planning

Too many advisors make the mistake of not telling clients it takes time to deliver the value they offer. A good financial plan needs to take into consideration a client’s aspirations. And it takes a steady stream of client interactions over their lifetime to help them build up to and then achieve those dream desires.

On this episode of Elementality, Reese Harper and Chad Jardine discuss why your real value is based on being an ongoing advisor, behavioral coach, and even counselor for your clients—and then delivering that value over a long period of time. When it comes to financial planning, most clients don’t have an expectation of what it actually is. Reese and Chad explain how you need to shift the value from their initial plan towards ongoing planning to set their expectations properly. 

 


Podcast Transcript

Reese Harper:
In order to have ongoing planning, you have to have deliverables. You definitely have to have deliverables and you have to have technology and you have to have touch points that allow them to feel like this is a real ongoing relationship, but you shouldn’t call it a plan. They’re engaging you to be a financial advisor, a behavioral coach, a counselor, an investment counselor. And that relationship is best accomplished through a steady stream of interactions over a long period of time.

Jordan Haynes:
Welcome to Elementality. I’m Jordan Haynes, financial planning specialist at elements. In this episode of Elementality recent Chad, talk about how to successfully shift the value from the initial plan to ongoing planning and how by establishing the right expectations we can help our clients understand the value of ongoing planning. As you listen, consider how you can create the right deliverables, incorporate appropriate technology and establish consistent interactions with clients to improve their experience and better their outcomes. Enjoy the episode.

Reese Harper:
Welcome to Elementality folks. I’m your host Reese Harper here with Chad, the dad in the studio and Tad behind the mic. I’d like to welcome everyone to another week of an exciting look into what is happening out in adviser land.

Chad Jardine:
So exiting.

Reese Harper:
Chad, what do we have on the docket for this week?

Chad Jardine:
All right. So this is, this is something that I think you’ll have a lot to say about, not that we have run into anything where you haven’t…

Reese Harper:
Usually we run out of things to talk about in this program folks.

Chad Jardine:
No, this is a perspective that we’ve seen from advisors that where what they’re trying to do is reinforce the value of ongoing versus initial planning.

Reese Harper:
Okay.

Chad Jardine:
And so I think to, to kind of put that in the form of a question, how do you see that? How do you see the value in either your own work or with other customers of helping them reinforce that ongoing value?

Chad Jardine:
And I think part of the question is there’s a fear that I’ll get a financial plan together and then I won’t need you anymore as a planner in that. So these planners are worried that they’ll lose their clients If the clients don’t see the benefit of the ongoing side of a financial plan.

Reese Harper:
Two-part answer here, that’s coming to mind.

Chad Jardine:
I’m ready.

Reese Harper:
Okay. The first thing you just barely touched on, which is once I deliver the plan, then my value is gone. I actually think that’s something I’ve had to learn the hard way in my own practice that historically people have given the value away and then hoped that the client would sort of implement the plan with the advisor. Meaning let’s start back in the insurance days. You develop this financial plan that involves how these products that are going to need to be implemented.

Reese Harper:
You go and you do the planning for free and don’t get paid. And then you hope that they buy on the other side of the plan and that worked for 50 plus years. Free plan, tell them about the value of what’s going to happen if they buy all this stuff and, originated in that early stages of the brokerage world and the mostly the insurance company distribution model. But it’s kind of like all the training that financial advisors have had. A lot of them have had about financial planning is actually rooted in from managers and people in those days.

Chad Jardine:
Right.

Reese Harper:
So there’s a lot of plans that get built and it’s like, here’s the plan. And the trick is in consulting. And if you’re like to take a McKinsey consulting engagement, or go to business school and get a consulting course, they would tell you that strategy is what the customer is engaging in to pay you for it.

Reese Harper:
You don’t give strategy away in advance of compensation, right? You don’t tell them all of the things that you’ve observed and seen before they engage you. And a lot of advisors, I feel like make that mistake. They instead of telling the client, look, the value I have to offer is going to be delivered to you over time. Right. And the value is first, I need to get to know you. And yes, as I get to know you and I get to learn about you, I’m going to have some initial observations. Right. Those initial observations though, are different than a plan.

Chad Jardine:
Yeah. Well, is there an expectation from clients about what the deliverables are from planning? In other words, if I’m reinforcing that, Hey, my deliverable is the plant or I’m a planner. I get people plans.

Reese Harper:
Plans. I’m a plan guy.

Chad Jardine:
Does that make them feel like that the deliverable is, you know, this binder or this thing versus…

Reese Harper:
Most customers do not have an expectation of what planning is. You’re just setting that expectation. And if they have an expectation of like, where’s my plan, tell them that that expectation is wrong, right? That expectation is not the way you operate you. Don’t, you’re not a plan, a delivery machine. You’re a consultant that is building your relationship with this client. The first step is you need to get to know them really well. You need to know their financial profile quantitatively, but you also need to know qualitatively, the type of financial personality they have. Are they an accumulator? Are they a family steward? Are they a more of an independent, a mogul, a phobic, right? These are all types of like personas that like every person has.

Reese Harper:
And once you get to know your client really well, then you can start determining a possible financial strategy that helps support their personality, that supports their psychology, that supports the way they feel about money. Because the worst thing that you can do as an advisor is deliver a plan that doesn’t meet the needs of your client and leaves them feeling like they’re unstable on shaky ground. Disenfranchised with the advice. I’ll give you an example. It happened to me yesterday on this, that might be a little bit more tangible, but I had someone come up to me and share a plan that they had been given by essentially a collaboration between them and another advisor, right? It was a set, they had a liquidity event and there was going to be a, there’s a series of facts that they’re presented with. And as they told me about this plan, and I asked more questions, I could clearly see that what had ever been, what had been delivered to this person wasn’t… They weren’t comfortable with the direction they were about to go.

Chad Jardine:
Right.

Reese Harper:
And the reason was that the consultant, the advisor had not spent adequate time, really understanding the dynamics of the relationship between this client and their spouse. And the spousal relationship that was happening was actually causing the client, who thought the plan, was the right plan to feel really uncomfortable because some of the lack of liquidity and some of the financial strategies that they’re going to be pursuing were not in line with the goals of the spouse.

Chad Jardine:
Oh, I see.

Reese Harper:
And so you ended up having this plan it’s been delivered, but no one’s going to do anything with it. Why? Because it really wasn’t built on a solid relationship of understanding this family. And it didn’t take into account their specific personality types and aspirations, charitable interests, goals, ideas around lifestyle, ideas around what it means to have an impact in.

Chad Jardine:
So if this person had pursued the plan that would have put them at odds with their spouse because their goals as a couple weren’t being considered.

Reese Harper:
And I’m just saying, that’s the typical habit deliver a plan that makes quantitative sense that there’s like resource optimization plan, right? Maximizing return, minimizing tax. That’s an easy thing to quantifiable put in front of somebody.

Jordan Haynes:
A big challenge for advisors is delivering a consistent, ongoing financial planning experience to clients. Knowing what to do initially with a client is easy, but how do you consistently add ongoing value to strengthen that new relationship? The elements financial planning system is centered on key indicators of a client’s financial health. And it gives you the structure you need to deliver ongoing value through financial planning. Start by evaluating key client financial data, then deliver timely insights that are both valuable and appreciated to learn more scheduled time to talk with us today by going to get elements.com/meet.

Chad Jardine:
So what would you tell your client to expect as ongoing deliverables? What makes ongoing planning, what makes the ongoing part in the client’s mind be where the value is?

Reese Harper:
Well, I do think that ongoing planning in order to have ongoing planning, you have to have deliverables. You definitely have to have deliverables and you have to have technology and you have to have touch points that allow them to feel like this is a real ongoing relationship, but you shouldn’t call it a plan. They’re engaging you to be a financial advisor, a behavioral coach, a counselor, an investment counselor. And that relationship is best accomplished through a steady stream of interactions over a long period of time. Just like you’d expect from a good basketball coach or a good football coach. They don’t know how to coach you in a month, you know?

Reese Harper:
So it takes a couple of seasons before the best coaches and the best players really gel.

Chad Jardine:
Could you give me an example? Let’s say that I’m your new client, how are you going to set my expectations about the ongoing type of interactions that we’re going to have, role play with me for a minute. If I’m your new client, how are you going to explain to me what this is going to look like?

Reese Harper:
First got me to say to begin a relationship, we first really need to have a real clear understanding of your financial information. I’m going to send you a link, just something that’s going to hit your phone. And I want you to just type in some of the questions and answer some of the questions and fill out some of this stuff for me, it’s going to be real easy.

Reese Harper:
Once I have that initial profile and understand who you are, then we can start developing some initial observations about what to do with your money, changes that we need to make right now. And then what I’m going to do is I’m going to start monitoring some of the critical areas of your finances that need ongoing management. I’m going to look at things like your taxes and your savings and your spending and your estate plan and your liquidity and your retirement contributions. I’m going to look at these at different times during the year when my system indicates to me that it’s important to evaluate them. And you’re going to hear from me periodically about adjustments we need to make. And if you ever want to meet with me and you want to sit down and have a meeting just let me know at any time. If I haven’t heard from you in a while, I’ll probably reach out and want to meet with you, but just know I’m going to be monitoring your situation and reaching out.

Reese Harper:
We are going to be touching base with you and I’m going to through this initial strategy we put together, we’re going to get some things going right now, but really the most important part is what we identify over time, the adjustments we need to make throughout the time we’re working together. Now, that kind of staging where you’re not really, I’m not committing to anything super rigid, right? But I am committing to three kind of basic principles. You’re going to see deliverables from me and the client will start to see them. They’re going to see a personal financial statement. They’re going to see observations that I have. They’re going to see scorecard updates on critical areas of their finances. They’re also going to hear from me and periodically, we’re going to have meetings that are really going to deepen our relationship.

Reese Harper:
That’s kind of the general way that I’m positioning it.

Chad Jardine:
So to kind of sum that all up if an advisor is coming to you and saying, Hey, I’d love to get your counsel about how I can drive home the value of ongoing planning and my value on an ongoing basis with my clients. What would you say?

Reese Harper:
Well, let’s pretend a client is asking for that. Why do I need ongoing planning? What’s the point of this, right? I think I would share an example. I would find an example that’s relevant to your customer. Find an example of a critical major decision that they need to make in their life. Maybe it’s the point that you’ve got a client that works for a large public company and maybe they have a vesting schedule on some stock.

Reese Harper:
And there’s going to be a point in their career where they’ve got to determine if this new job opportunity they’re being presented with is better than the status quo and how that new job opportunities going to financially impact them. You’re painting a picture of a future event, or I’ve got a business owner client, and that business owner is going to have a liquidity event. And when that liquidity event happens, they’re going to have to determine how much to leave on the table, how much to take in secondary, how much they’re going to do is to pay down debt or purchase a new home. Paint the picture of these life changing decisions and talk about the financial costs of each of those, of that one decision. Just that one example. If we make any decision that’s made at that point in time could be worth millions of dollars in either really efficient great decision-making or losses due to a poor choice.

Reese Harper:
You could probably come up with five or six major decisions that are going to occur. If they don’t have a financial counselor, who’s been with them for several years prior to that moment, or at least months and months, maybe at minimum a year, then when they need to make that choice and they go to somebody else and they say, here’s facts, a and B, which choice should I make? It’s unlikely that that financial counselor who they just hired a week before making this choice is going to have the depth of knowledge around their behavior, their financial profile, what makes them comfortable, what makes them feel centered? What values really their decision-making. It’s unlikely that someone in a week is going to be able to give them a choice that’s fully informed. And someone who’s been around for years getting to know that person and really positioning themselves by looking at all their key metrics, all their behaviors, all their decision-making.

Reese Harper:
Now you’ll be able to optimize those key decisions and those major life events where you, you probably only have 10 of them in a lifetime. That’s the point where your financial advisor actually just earns their 1% a year. They earned it in these kind of infrequent massive moments, but in order to be prepared for those, you got to be doing your basics, right? You got to be exercising in order to finally be able to run that marathon or to be able to actually push through that PR and lift a little bit more weight when that moment arrives. Or to be able to finally ski properly down a hill when it’s ski season. And everything’s on the line I’ve got to be prepared throughout the off season to be able to make that decision properly. And I just think that that most people try to cram too much right at that instant, and they’re not really ready to make the right decision. And consequently they make suboptimal decisions and that’s more expensive than not having a financial advisor, you know.

Chad Jardine:
That’s great. Thank you.

Jordan Haynes:
Next time. On Elementality.

Michael Kitces:
If I take an established independent REA that does, quote, “wealth management”, kind of this like investment management, plus financial planning for some fairly affluent folks, the big holistic offering. And they’ll say, “we’ve got investment process, but we give you all this financial planning advice. And this is where a lot of our value is. So we try to paint this picture often that we do this holistic thing.” I say cool, show me your P&L, show me where the money goes. How much are you spending on all the investment software that supports your investment? And if I drill that down on a per advisor basis for an established advisory firm, I will often see some costs in the neighborhood of 7$ to $10,000 per advisor trading software rebalancing software, the Orion Black diamond tamaracs of the world at their $40 in account charges often can add up to as much as 7$ to $10,000 per advisor. I say, cool. Show me your financial planning software. Oh yeah. A hundred dollars a month.

Jordan Haynes:
You can learn more about the elements financial planning system at getelements.com/meet and schedule a time to meet with me, or one of our friendly financial planning experts. Elementality is executive creators are Reese Harper, and Chad Jardine. Elementality is produced by Abby Morton and directed by Jordan Haynes.

 

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