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Taking a Modular Approach to Financial Planning
• Luis Rosa CFP®, EA • November 16, 2021
Put yourself in your client’s shoes. You’ve just engaged a financial advisor—for the first time—and while the prospect of getting your financial house in order is exciting, it can also be daunting.
I run a fee-only financial planning and investment firm to work with my Generation X peers and empower them to build a better financial future. Many of the clients I engage are “the firsts” within their household to deal with many of life’s milestones—the first to finish college, the first to have a job with a 401(k), or the first to buy a home.
Young people have very dynamic lives where new milestones are reached continuously, resulting in decision points that financial professionals are in a position to help with.
Making Planning More Palpable
I want the planning process to be productive and empowering for my clients—not overwhelming, which is one reason I choose a modular approach to financial planning.
In a planning engagement the full financial plan is usually the deliverable. Modular financial planning helps these clients address their long-term financial needs and opportunities, as well as their more urgent needs, by breaking planning down into separate or independent parts.
I work with clients to uncover what’s important to them, and then in smaller increments tackle their urgent financial priorities in action-oriented steps. I also increase the number of touchpoints I have with a client—especially at the start of a relationship—from the standard one meeting a year. Each quarterly meeting may include three to four action items that cascade in a time-sensitive manner to break down what might really resemble 10+ action items towards their full financial plan.
Throughout this process I offer people financial literacy and education, and serve as an accountability partner to help them change their behavior. This approach allows me to create value for my clients as quickly as possible.
Turning Planning into Action
At the beginning of any planning engagement, I like to do a SWOT analysis (strengths, weaknesses, opportunities, and threats) for the client. From there I focus on the things that are time sensitive, usually those are the opportunities as well as the weaknesses.
For example, I often meet with a couple who just had their first child. They’re saving for their first home and neither of them have life insurance. So that’s an item we need to address immediately. Life insurance quotes and estate planning resources will be their initial action items. We’ll do another follow-up to compare quotes and I’ll help them make a decision, resulting in life insurance as the first deliverable in our series of meetings.
And so this cycle of action and follow-up occurs as we tackle all the urgent items and build towards their financial plan. These planning interactions may be just a 30-minute meeting or phone call. It’s not necessarily the time commitment that is significant, but it is a meaningful touchpoint with the client to keep momentum on their plan. These check-ins are also useful to keep in close contact, should their priorities or goals be shifting from a circumstance in their dynamic lives.
For the majority of my clients, continuous planning occurs for items like open enrollment of their employer benefits, liability exposures, and tax returns. All of these are decision points that present opportunities for you to still bring value and grow with your clients as well.
Keeping Value and Fees Transparent
Providing alternative and transparent fee structures has opened the door for me to work with my target market of younger investors. By charging an annual fee for planning services I am able to work with clientele who may have been overlooked in the financial advice market, simply because they did not meet a minimum of investable assets.
My annual fee is based on income level and can be paid monthly or quarterly. Every client is given a free consultation, which requires filling out a pre-meeting questionnaire. While the consultation works as business development, it also helps me scale my efficiency as I pre-screen who I am able to help.
My goal for my clients is to get to a point where my fee doesn’t necessarily have to all come out of pocket per se, because the planning helps them continue to accumulate wealth.
Extending Service to Multi-generational Relationships
To avoid client turnover of one target market, I also work with multiple generations of families, especially in the Spanish-speaking community. Clients may refer their parents, like, “Hey, my parents are business owners, they prefer someone who speaks Spanish, and they need help; can we work with you?”
Typically, those types of engagements will kick off with a family meeting, bridging the gap between elderly parents and their children. A lot of the financial planning work is actually on the educational side.
In my generation, we were always starting from scratch. I never saw anyone inherit a property or life insurance proceeds. When I grew up, the best-case scenario for a family member passing was their funeral was paid for to avoid a burden to anyone. So, I saw firsthand how education and empathy could empower individuals and households to think about the possibilities of their money.
I came to financial planning to help my clients—young and old—realize that money is a tool, not an end result. I have a passion for serving underserved and diverse communities that can benefit from financial advice, financial literacy, and accountability.
Building a network to connect families with financial planning may bring you a referral, and it may keep those client assets in house after a death, but the reward goes beyond that. Facilitating the transfer of knowledge and values around money between generations is quite meaningful. Your advice can make an impact for a long time to come.
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