Jordan explains how advisors can implement a quarterly service calendar to proactively monitor client financial health through address 4 key questions about retirement readiness, asset mix, income usage, and risk management. advisors can create an efficient system of verifying, analyzing, and reporting on their clients’ financial progress.

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Transcript

Jordan Haines:

Hello friends, and welcome to another episode of elementality. My name is Jordan Haines, financial vital specialist here at Elements and your host for today’s show. Today is a continuation of what we talked about last week and last week. As a reminder, we talked about a monthly or how to create a monthly service calendar.

So if you have not listened to that, I highly encourage you to do so. I go through a great deal of detail there. Now, for many advisors who listen to that episode, many of you are probably thinking. That monthly is completely unreasonable and that’s fine. That’s actually totally okay. Knowing the needs of your clients is the first step.

If you think that clients need something monthly, create a monthly service calendar. If you think that they would do well to have something quarterly, then do something quarterly. There is, I think Matthew Jarvis, his organization, they do, um, a lot around quarterly value adds is what they call them. Now what we’re gonna talk about today is, um, basically summarizing what we talked last week, but creating that in more of a quarterly service calendar cadence.

Um, you can. Make this probably pretty similar to Matt Jarvis’s. Um, quarterly value ads, although this is gonna resonate more towards, um, elements and we’ll go through a few ideas there. I’m not gonna get as detail oriented as we did last week, last week. I mean, frankly, if you go through, um, the process that I covered last week, the process being verify, analyze, report, that’s essentially take that process, apply it to a quarterly cadence, but then have different topics that you’re talking about.

And that’s what we’ll go over today. So. Let’s get into it. Um, I am gonna draw a lot from elements. Now you can take these questions and you do not have to use elements to answer them. Uh, I think it is helpful exercise for everyone to go through. If you go to our website, get elements.com, and you scroll down a little bit, you will see an elements scorecard.

And next to that scorecard, there are going to be a few questions, four to be exact. The four questions from bottom to top are going to be. Am I prepared to make work optional? Do I have the right mix of assets? Am I using my income wisely and am I taking the right amount of risk? These are four questions that for the last decade or so, since Elements has been in existence, these have been the questions at the center of the Elements Scorecard.

And when creating a monthly org, or I mean, excuse me, a quarterly service calendar, these questions serve as a really valuable framework because there are specific things or measurements we can look at to answer those questions. They provide a theme of those 90 day period. So let’s go through that one by one and talk about what you can talk about in each of those.

You’ll notice that the first one that I talked about was, um, am I prepared to make work optional? Or maybe another way to think about this, another way to answer this question. Um, am I prepared for retirement? Am I prepared for financial dependence? Am I on track to make work? Optional retirement, financial dependence, whatever you think resonates with your clients the most, that’s going to be the words that you use.

Here, the words that I’m going to use is, am I on track to make work optional? Those words deal with retirement planning. There is one simple score that we use at elements to answer that specific question, and that is total term. Total term is calculated by taking someone’s net worth and dividing it by how much they spend in a year.

So roughly, if you look at that number it, it means how many years you can live on your net worth. And that is a really good baseline score to look at for a lot of clients. It helps ’em get a sense for how they’re doing if they’re on track to actually make work optional. Now, there are some other ways to look at this.

Um, their income lab has a great, uh, system to be able to look at, uh, per preparation to make work optional, but I have found that total term is good enough, right? Again, we’re not looking for precision. We’re not looking for incredible accuracy. This is not a Monte Carlo. We’re not doing that detailed. Of analysis.

We are really just looking at their ability to make work optional and responding to that. So you could say. This quarter, for example, we want to know if you’re prepared to make optional. To do that, we need to know two things. One is we need to understand what your net worth is and get an update on that.

And then two, we need to know how much you spend. And so you can, in your verification, ask specifically for those pieces of information, create a little writeup, or if you’re using elements, you can take the total term report and send that to them, and that can be one area that you visit. For that client, am I on track to make optional, it’s something that we revisit every year on this quarter.

The second question that we ask in elements is, do I have the right mix of assets? This deals more with the balance between liquidity, qualified retirement accounts, real estate equity and business equity. Those are the things that I’m most commonly looking at, and so what I want to see is more progress oriented.

So the reason the, the, the difference, I would say the big difference between quarterly and monthly is that monthly you’re, you’re more doing a state and time, you know, here’s what’s happening right now. Whereas quarterly it can be somewhat of a progress report. So especially when we’re looking at mix of assets, we can look at those specific elements, liquid term, qualified term, real estate term, business term, very simple ratios, and we can see how that balances out.

But maybe more valuable to someone is seeing how those are trending over time, what went up and what went down over the last year or the last quarter. If you think that that’s valuable, I think that’s a really helpful thing to talk about with people. This is where oftentimes I end up talking about investments.

And where are they saving into to make sure that they are managing their asset mix well? Um, but that is a really valuable thing to talk about. So if I’m gonna do verification, what are the things I’m gonna ask for? Well, I’m gonna ask for a net worth summary again, but maybe a little bit more detailed.

Whereas with total term, I’m just asking for their total net worth number. This one, I’m looking for specific breakdowns between cash after tax investments, Roth IRAs, pre-tax business, all of those things so that I can get a sense for how they’re doing in those specific asset categories. And then I’m asking for loan information, real estate loans, business loans, student loans, car loans, all of those.

Basically I just want an updated balance sheet. So if you are using a tool to track someone’s balance sheet, it’s pretty simple. Go into that tool, update the balance sheet, make sure it’s accurate. The other thing here, again, we just need spending. So really we just need the same things. So if you’re gonna do, do I have the right mix of assets or am I using my inco or am I, uh.

Prepared to make work optional. What I have found really helpful is to space those out over six months. So maybe let’s say quarter one you do am I prepared to make work optional. And then quarter two, you do something like, am I using my income wisely, which we’ll talk about here in a second. And then quarter three we do the, do I have the right mix of assets?

The reason I like that is because then I can get up to date. Um, net worth information or balance sheet information, and I can space that out over six months rather than bucketing all, and within 90 days having that all there. So that’s the second thing I’ve seen a lot of people do. The third question that we’re gonna ask is, am I using my income wisely?

This is a cashflow conversation, and in the elements infrastructure, it’s really simple. Your income goes to 1 0 4 areas. It can be saved, spent, paid, pay down debt, and pay down taxes. And for those, they’re all simple ratios. We calculate a savings rate. We call the spending one burn rate, debt rate, and tax rate For these ones, what do I need?

Well, I just need to know what their income is, and then I need to know what their contributions are for savings and how much they’re spending and what their debt payments are in their tax rate. Their tax payments. Sometimes I’ve worked with advisors that choose not to get the tax rate. During this conversation, I.

That’s entirely up to you. Now, if you want a specific breakdown of that, um, you can listen to last week or go to our website to see what’s included in there. But like, for example, savings, you know, what’s going into savings accounts versus brokerage accounts, versus pre-tax accounts, things like that. Um, spending is just one number, but if you want to get granular, you can for debt, you know, we’re looking at student loans and real estate loans and business loans and investment real estate loans and car loans and things like that.

And then for taxes, what are we paying in federal or state or local income tax, payroll taxes, or a MT, things like that. That’s all really helpful to help you understand if you’re using your income wisely. And when I do a report, really all I need to do is report what percentage of my income is going to savings, spending debt, or taxes.

It would be nice to have a report that shows. What was it last year and what is it now? But in my experience, just showing those numbers creates a little bit of visibility that you as the advisor can now add value to them. The final question that we like to ask is, are we taking the right amount of risk?

And for this one, you can address a number of things. The, the three topics, um, that, uh, we include in here are insurance, investments and estate planning. Estate planning isn’t something that I address often with clients, and so I know some advisors will do that every other year. Insurance is something that every year we look at disability, life, and umbrella policies just to make sure that they’re doing okay.

Right? So that one can be pretty simple. So to summarize, what do you talk about in a quarter if you are going to do a quarterly service calendar and you use something like elements. A really simple way to frame this is we are answering specific questions each quarter, quarter. One is, am I prepared to make work optional quarter two, am I using my income wisely

quarter three, do I have the right mix of assets? And then quarter four, am I taking the right amount of risk? Having those as your question that you answer is really helpful as a theme of that 90 day period. Now, how you actually go about implementing something like this is gonna look very similar to what we talked about last week.

So if you want really granular details, go listen to last week’s episode, but the three step process are gonna be this. Step one, verify, get the information that you need. Precision is not super needed at this point. Again, because if you’re using a system like Elements, you’re not reliant on precise information.

You’re reliant on good enough information. Step two is to analyze and assess. Now what you’re looking for, there is two thumbs up versus needs attention. Again, you’re looking for very objective measurements that you can look at to say, this person’s off, this person’s not. So for example, if I’m looking at are you using your income wisely?

Maybe one of the big things I’m looking at there is. Their savings rate compared to their debt rate or their burn rate. Is their savings rate high enough? Is their debt rate too high? Is it too low? Where is that at? That gives me a sense to say, this person, we need to have a conversation. This person does not.

Now, if you do a quarterly cadence like this, you probably have a little bit more time to afford your analysis, so you can probably get a little bit more granular. That’s step two. And then step three is report. Have some sort of report that you can send to them. Elements. Creates a really nice, uh, way for me to do that.

I can print off specific individual elements reports and send it to them. Or if you want to summarize a balance sheet or honestly just send an email to them, you’re welcome to do that. Or there’s a report in your planning software you can do as well. So I find this really helpful if you, if if listening to last week you realized, ah, I don’t wanna do something monthly.

And quarterly sounds great to you. Think of bucketing all of these informations. If you were to take all the different areas of finance and create categories, what would those be? The, what I’ve gone through today is our version of these categories. Again, as a reminder, the three questions, am I prepared to make work optional?

Am I using my income wisely? Do I have the right mix of assets and am I taking the right amount of risk? Hopefully that helps get you guys thinking about how you can create your own quarterly service model. Let me know if you have any questions and I’m happy to help.