The idea of making 'a plan' has been overemphasized. Everyone supposedly needs one, correct? "My advisor insisted I must have a plan ready!"
The issue is that most people don't actually grasp what 'a plan' entails.
The Problem with "The Plan"
Generally, when a prospective client receives a plan, it often comes from a department adjacent to their advisor, though not always. The plan consists of a series of projections with compiled data, presented as a package filled with charts, graphs, and assurances like "you're going to be fine." It typically includes a lengthy task list, which can be overwhelming.
At times, the advisor doesn't deliver this plan personally; instead, it's provided by someone from the financial planning department, a role I am quite familiar with from my own experience.
The process can be overwhelming and serves primarily one purpose: to confirm that a plan has been completed. Check!
Have you had one of these experiences?
Yes, absolutely.
No, I can't say I have.
I had a plan done, and I feel like it left me with clarity.
Why this doesn't work
Clients who have previously received that version of 'the plan' come to us because it hasn't provided them with clarity, confidence, control, comfort, or coordination. We refer to these as the 5 C's of planning.
There is something missing here. And that is usually in the nuances of a planning PROCESS.
What a properly structured planning process looks like
Discovering your objectives and priorities
The initial phase of a well constructed planning process involves a lot of homework, for both the planner and the client.
For the client, it involves compiling all financial information into one spot for the planner to review. This can often provide a client with CLARITY as they have never been through an exercise as exhaustive.
For the planner, it means understanding the client on a much deeper level. This process includes both quantitative questioning and data clarification, as well as qualitative questioning to ensure the planner comprehends a client's broader values (such as wanting to enjoy a healthy and fulfilling lifestyle without financial concerns) and more specific goals (like planning to buy a second home in 2026 for $1 million).
Creating an initial framework
What does 'current state' look like for the client? What are some of their strengths, and where do we need to better focus our energies during the planning engagement?
We examine a client's existing net worth and cash flow requirements, to create an initial foundation from which we can build upon.
Financial Analysis
The planner now gets to work to analyze a client's financial situation. This can either be done all at once (the traditional creating a 'financial plan') or in bite sized pieces (this is our approach - taking each financial planning module and addressing them individually, or modularly).
In this phase, there is likely little work required of the client, and the planner begins to create the initial planning framework for discussion.
PRO TIP: Providing our analysis AHEAD of meetings allows our clients time to digest the information, and more importantly, come up with a list of questions based on our planning that we can have a productive discussion around during our meeting.
Joint discussions
Now for the sweet part of the planning - collaboration!
Since our clients have had time to digest our analysis, it leaves much more meeting time for inquiry. Our clients are curious about why we have recommended what has come out of the analysis phase, and we are more than excited to discuss that with them.
Sometimes, something doesn't fit - and that's ok! This is usually draft one of our planning, and we will make any required tweaks necessary.
As well, we conduct 'live modelling' with the client via our software engine, Planworth. This enables the client to receive immediate 'what if' outcomes within their retirement modelling, and to sit in the driver's seat! Our clients love this part - getting to make direct impacts on their retirement planning based on modifications to our recommendations, or even playing out 'what if' scenarios, like a market crash, a premature job loss or death.
In this live process, we conduct stress tests on the different scenarios developed with the client to test if their retirement lifestyle remains sustainable under various market conditions. This gives them confidence and peace of mind regarding the potential effects of the recommendations.
We can also review any recommendations based on client feedback to ensure they are suitable. Our approach is collaborative rather than prescriptive, allowing the client to make the final decisions.
Implementation
One of the key areas that most planners fail to support their clients through is implementing the various, and often numerous recommendations made in the prior analysis phase. "I have this list of recommendations but... there are so many things, and so little detail as to how we can actually do them!"
Think about this planning recommendation:
Maximize your TFSA each year.
Ok, what's missing from that? Context. How about one of these instead?
Using your anticipated 2024 tax refund, deposit $7,000 into your Questrade TFSA via bill payee. Due date: June 30, 2025.
Set up a monthly pre-authorized debit plan with Questrade, from your TD Daily Chequing account, for $583.33, beginning on January 15, 2025. Due date: January 10, 2025.
We use Monday.com to collaborate with our clients on to-do's and assist with implementation through our shared task work management board.
Monitoring
As planning is a verb and not a noun, monitoring is a key component of our planning relationship with our clients.
We don't believe in the 'one and done' approach. If there's anything that has ever gone 'to plan' in your life, congratulations, that's a big feat! But for most people, many factors cause us to need to revisit our planning on an ongoing basis, including:
Life changes. This can be job changes, moving, births, deaths, you name it. Life is life!
Tax and legislative changes. How do you know if your planning is still relevant, two years later? What has occurred that may have shifted some of the planning we have set in place?
Priority shifting. Sometimes this can be spurred on by health challenges, but often can just be related to 'getting older, getting wiser'.
Our Annual Service Models aim to provide continued service to our planning clients, with either a low touch or high touch approach, depending on needs.
Takeaways
Planning - not a plan.
Ongoing, ever changing, and needing care, consideration and upkeep, just like all other important aspects of life.
Instead of seeing financial planning as a chore, think of it as a tool to bring some order to your life. It helps you make decisions with more clarity and confidence, and gives you the assurance that you're moving forward with control. Plus, it reassures both you and your family that you're doing everything possible to set yourself up for a successful future.
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