Sharing Our Unique Planning Techniques for Financial Advisors Themselves
DEAR ADVISORS,
Today, let’s pull back the curtain a bit. I want to share what makes the financial planning we do for advisors different than the planning you’re doing. Three differences stood out to me, but it’s all coming from a foundation we share. One thing we both do for our clients, which they could never do themselves, is view their financial life objectively. It’s one of the most valuable thing about an advisory relationship. An unbiased perspective allows us to explore strategies and help clients overcome obstacles they never would have seen without us. We do that in our financial planning, but it looks a little different, in the following three ways.
Including your Advisory Firm in your Financial Plan - I’m a true believer in comprehensive planning. It takes a lot longer, but it’s much more accurate. I also love having enough data where we can get fancy with the scenarios! In order to be comprehensive, I encourage clients to include everything in their plan, and use the scenarios to exclude specific things and preview a more conservative outcome. For example, you may have a client who doesn’t believe Social Security is going to exist. The most accurate way to do their financial plan is to include Social Security in it’s current format, and do a scenario to show what it would look like if Social Security were reduced or not present at all. Similarly, I have advisor clients who want to exclude the value of their business from their financial plan. The most accurate financial plan includes the business value, but most business valuations cost $3,000-$5,000 and that’s not worth it. We use a technology which isn’t available for most business owners - we use Truelytics to calculate the intrinsic value of each advisory firm. It’s built for advisory firms, and constantly updated by the data of new firms adding their data every day. The intrinsic value produced is typically lower than could be obtained by finding a synergistic buyer on the open market, so it’s a good, conservative number to use for planning purposes. Some advisors use the ValueBuilder software to run a quick valuation, others use spreadsheets, and some provide referrals to valuations experts. Those are all good solutions, and highlight the value of comprehensive financial planning for business owners. An advisor’s financial plan is just as complex, if not more, which is why this valuation piece is so crucial.
Business Planning as part of the Financial Plan - Every entrepreneur I know has an business so intertwined with their personal finances and their identity, it’s nearly impossible to separate them. That level of dedication, or obsession, often leads to success, and that’s a mindset we need to be conscious of during the financial planning process. I’m in a study group with other advisors who serve business owner clients. One of the things we’re working to solve is how to delineate between financial planning and business planning. If you’ve ever worked with a business owner client, you know how easily any topic can lead back to the complexities of the business. It can eat up a lot of time and energy, but it’s also hugely valuable to cover business planning topics. My advisor friends who also serve business owners are outlining an established process to coach business owners on business planning topics, and charge separately for it. That’s an ideal service model we’re working towards in Ellevate as well. In the meantime, we’re solving this problem by setting aside one of our quarterly meetings each year to solely focus on business planning. We talk about things like the long-term vision for your advisory firm, what pain points are on your mind, and progress towards your business goals. Updating your firm’s valuation annually generates several KPIs, also known as Key Performance Indicators, which can be a helpful guide. Because I’ve worked for several advisory firms, and own a firm myself, we often end up brainstorming ideas and solutions together. That’s one of my favorite things about working with advisors! We get excited about changing the world together, and that’s what we attempt to do during the business planning meeting. The quarterly meeting schedule works great for us because there’s so much to cover in an advisor’s financial plan and business plan!
Exit Planning involves Continuity Planning and Succession Planning - The financial planning process is the perfect place to talk through a client’s exit plan. My training as an exit planner naturally comes through during our estate planning and business planning conversations. We talk through what would happen to your accounts and your business if something unexpected were to happen to you today, according to your current legal and estate planning documents, or lack thereof. Sometimes the ideal continuity plan is already in place, but most often we uncover some things that would spell disaster for the advisor’s family and/or their clients. Most advisors only have this conversation around a client’s personal estate plan, but we make a point of reviewing the legal documents for the advisor’s firm as well, because that’s where we find the estate plan for the business. We also ask our clients how they’re feeling about their work. We never ask ourselves these questions, which means we sometimes miss out on being happy because we have forgotten what happy feels like. What if you’d rather sell your business and do something totally new and different? Having an advisor to talk with about your career can be life-changing and hugely valuable, especially for business owners. It also can uncover signs that it’s time to start the process of retiring from the business before it’s too late. Navigating a succession plan takes about 10 years to pull off successfully. That’s why we ask about the advisor’s job satisfaction and retirement timeline every year. The advisors who intentionally take time to reflect often discover new opportunities which ultimately lead to happier, more successful lives and businesses.
We all need accountability to talk through emotionally difficult subjects like exit planning and our own financial plan. I can tell you from experience because we’re getting ready to meet with our own financial advisor next week! Because I knew this meeting was coming up, I made progress on updating the exit plan for Ellevate. I know we’re going to talk about it, so I wanted to “get my homework done” before the meeting. We haven’t even had the meeting yet and I can see these other positive changes in my life. It’s all because of the relationship with our advisor. I’m sure your clients feel the same way about you, but have you ever experienced that for yourself? If not, it’s time to elevate the future of your family and your financial advisory firm!
Warm regards,
Brooklyn
P.S.
At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Click here to schedule an initial phone call with our team today or get to know me on my bio here!