How do you the client make & build your decisions that impact your financial future? Most advisors, whether an accountant, lawyer, investment, banker or insurance based individual have all been trained to work on the strategies, tactics & tools; the 'How's of planning'. Often times, the product recommended is the latest, newest, best & current solution, with the mentality of lets makes it fit the client until a better one is introduced to the marketplace. This unfortunately is the nature of the beast!
For the most part, these advisors can offer you good information and advice but they are all trained & educated from different financial disciplines. The result of this is when it comes to business, retirement or estate planning, there is an above average chance that they will all have a different proposal on how to do it. When this happens, the client lacks clarity and issues arise in the decision-making process. To prove this, how many times have any of your advisors ever recommended something to you and at the end of the day, you did not do it? The reason this occurs as a client is that you lacked some type of clarity to make a 'wise decision'.
The best advisors will start & finish at a different point. Instead of starting out with the strategies, tactics & tools, they will start out with the mission, vision, values & goals- the 'Why's of planning’. Wise decisions require clear mission, vision, values, and goals. We challenge clients to focus on the goals rather than the means of achieving the goals. This eliminates what we refer to as eternal planning when clients procrastinate and do nothing. This happens because they lack all the appropriate information, along with a clear understanding of why, in order to make wise decisions.
From experience at the onset of a relationship, many clients will say, “I already have my retirement or estate plan”. In reality they have an estate freeze, a crystallization, a will, a power of attorney, possibly a family trust, some life insurance, an investment off shore, and on and on. All they have done is basically described a list of strategy’s, tactics & tools. When you drill down into the complexity of their current program you often learn that nothing connects any of these recommendations together.
You should be asking yourself three questions regarding your existing plan(s):
- Does it retain sufficient resource to protect your financial security and help maintain your desired standard of living? Most people will answer, I don't know or I think so, but I don't know how much. To prove a point, how many people do you know have ever admitted to having excess wealth?
- Does it pass on to whom you want, when you want, the way you want, at the lowest possible cost? Most people will respond 'I don't know'.
- Does it direct your social capital in a manner that is consistent with your personal values? The usual response is 'what does that mean'?
When anyone cannot answer any or all these questions, it means that most or all their advisory channels has been focused on strategy tactics, & tools. To take this a little further, most people have stuff all around them but they have no idea where on the road map they are. Let alone know where they are going or what route they should take. A good plan should say, here is what I have, here is what it will get me, but most importantly, here is what I want! Another more specific perspective would be a client’s investment portfolio. Ask yourself regarding your existing investment plan(s):
- Describe in your own words your plan, your strategy & your process regarding your investable assets and how does it rebalance itself on an ongoing basis to reflect your personal risk tolerance?
- Does your investment plan take into consideration all your assets including business holdings?
- Are you paying appropriate fee's based on the amount of wealth you have?
- Are your assets structured in a tax effective nature?
- Does your investment plan match with your retirement, estate or business plans?
Again, if you cannot answer most or all these questions, are your advisors doing the best possible job to help you make wise decisions? The question for you is, who is helping you make wise decisions by focusing on your mission, vision, values & goals?
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