Everybody thinks that we advisors are in the knowledge industry and our goal is to impart knowledge upon our clients, but we're really in the “doing business.” We exist to serve our clients to help them implement a plan to improve their financial situation. All the knowledge in the world doesn't help anybody if there's never a step that's taken to implement; there has to be an action where they do something.
So at the 30,000-foot view, we call our process “DIEM,” like Carpe Diem– Seize the Day. And the D that's just for discovery like that is discovering your dreams, that is where you are where you want to go. The second step is I, that's for ideas, how do we take you from where you are to where you want to go in the most optimal way. E, we come beside you and we help you execute on those ideas that are going to be highlighted in the one page plan, which we call the Financial Fortress Blueprint. But we think the most important part of the plan is the M. That's the ongoing monitoring of the plan, and it's kind of a circle that goes around and around. Because we know that the moment a plan is put into place that it's wrong, we just hope that it's less wrong by having a plan at all.
We're going to have to continue and go back through that discovery, create new ideas, execute and monitor again over time, because we know that there's going to be life events that happen, whether they’re about death, divorce, job, change new child, that's going to make us come up with new ideas, and we're going to have to monitor the plan anyway. Because all of our assumptions are going to be wrong, whether they're around interest rates, inflation rates of return, how much we're saving on a monthly basis, what the employer matches, those are all variables that we have to tweak and continue to change over time. It is far from a set it and forget it type of planning experience.
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How important is the language you use to set the tone for the relationship?
I think the language is incredibly important. Because I don't want to be viewed as the investment guy– I'm the planner, right? The value that I add is the plan. The investment management is really just a commodity that comes with it. And you never want to set yourself out as some sort of magic wizard who's going to be able to time the market and tell you when to get in and when to buy the dip and when to sell. That's just not what we believe in. So the language you use from the beginning is incredibly important. Because you want to detract as many people as possible from wasting your time or not being good fits if somebody is out there looking for an investment manager to consistently beat the market to consistently get out of depths. Like I'm not the guy and everything that I'm putting out into the world is really highlighted about one behavior, but to who my ideal clients are. The ideal clients for us typically are a 42 year old and 38 year old couple who have three kids– they're super busy executives, trying their best to get their kids in the minivan just in time to rush through Chick-Fil-A to get some chicken nuggets before they arrive at the baseball field. And they get to the baseball field five minutes before the game starts and they immediately rush home, they get the showers, they put the kids to bed and they're working on their presentation they got to do at work the next day.
That is the avatar of the average client that we're working with. And most of them have reached a point. It's not that they can't do this stuff on their own, they probably shouldn't do it on their own. Or they just simply don't have the time, because their life has reached some sort of complexity point, whether it be ISOs, or RSUs, or employee stock purchase plans. They need somebody to kind of come along beside them and be their guide through this journey that's become a little bit too complex and a little bit too time consuming from where they're at at this point in their life.
How are you presenting the value of the intangibles like insurance or estate planning?
We go through the same process with every client every time we do what we call our “castle picture,” which literally just breaks every dollar they have into five buckets. We tell people that intentionally or unintentionally, everything that you own falls into one of these five buckets. The first bucket is emergency funds. The second bucket is our major purchases. This is setting dollars aside for purchases we're going to have coming up in the next three years. And those first two buckets like a lot of times after that I'll draw a dotted line on and say hey, the only thing these two buckets are for is number one, safety number two liquidity. On the other side of this dotted line. What we're trying to do is maximize your returns for your particular plan and risk tolerance. So bucket number three is our Intermediate bucket, in that point that those are dollars that have flowed over from our emergency funds, right? Maybe our goal is to have $25,000 in our emergency fund. Once we have more than 25,000, the pour over happens into the intermediate account. That's where we're starting to invest for other goals, dreams, aspirations, maybe that's the 529. Maybe that's a joint brokerage account. That's the employee stock purchase plans. The ISO is the RSUs, those types of things. Bucket number four is our nest egg. Those are generally our long term retirement type assets. Our Roth 401k is our 403 B's or IRAs.
And then finally, it's our legacy. And we go through the legacy bucket with every client. How do we protect the greatest asset that most of us have– our ability to earn income disability insurance? What happens if we don't wake up tomorrow morning? Do we have the right amount and the right type of life insurance? Do we have our estate planning documents in order and we that's our legacy block, we go through that with every client every time. And then also on that castle picture, we have the other assets like a home of business raw land. And so what we're trying to do is pictorially draw out their balance sheet. And regardless, if somebody has met with us one time, or this is appointment number 40. We're going through that castle picture and updating it because we think it's really imperative for people to know what they own, why they own it, and where it fits into their overall picture. And everybody goes through that process a little bit differently. But we have found it incredibly powerful.
What has been the biggest hurdle in getting clients to follow through with the planning process?
When I first started out, I thought I was doing everything right. I would give people 80-120 page plans, and there'd be three lists of action steps, because that's how I was told to do it. That's how you did it. And, we do an annual plan type of meeting, and we'd revisit it. And I'd always kind of open up to page 78, and say, Hey, these are these are the action steps, there's 26 to do items, how do we do? And they just kind of look at you blank and be like, Yeah, we didn't do any of those things. So what we have learned over time is that we never even if we have 25 action items, we never want to give clients more than two to four things at any given moment. Because these are generally people who are already overwhelmed, who already don't have a lot of time on their hands. If we can give them two to four action items and get those things done, it is much more likely to get implemented. And now that 95% of our meetings are virtual, we try to do everything live with the client that we can through screen share.
How does this change from family to family– what do you prioritize?
The way that my mindset works is I always start with a worst case scenario. Generally, the things that are the pillars, the foundational items are going to be the estate planning documents, the disability insurance, the life insurance, those are, the questions like, what happens if I die tomorrow? What happens if I can no longer create an income for my family? Right? Those are the most pressing items. I'm not one that believes in starting where the clients want to start. Because if you do that, you might never have the tough conversations.
What led you in your career to realizing that all people needed was one page?
My honest opinion is people pay thousands of dollars for financial plans that are nothing more than a doorstop. I mean, people did not open these things. I spent 13 years at the bank, as you alluded to in the intro, and I worked closely with the wealth management department. There was one particular guy that I got to know pretty well; he kind of just had me do some of the plans as a young bank guy, because he didn't really want to do them anymore. And I was like, well, tell me about this client. I mean, he's paying $50,000 for this plan. I asked how many things does he actually implement? And the guy looked at me studying, and he's never taken one of these ideas, but we do it every year. And I thought, well, what if we just give him one page of the plan? He's not doing anything anyway, what do we have to lose. Literally, we handed him one page with three bullet lists things on him, and they, he brought in a bunch of money, because he had brought more money to the bank, he got a life insurance policy. So I was like, here, here, they've had this relationship for 567 years going through the same process. The guy never did anything new–repetitive, repetitive, repetitive–we did something different.
We took it down to one page, all of a sudden, you started implementing things. And if you think about how you consume content, how most people consume things, they want something simple and straightforward. It's not that we don't have other supporting details behind the scenes. If someone for a lot of people who say, hey, what you need is $1.2 million in 20 Year Term insurance. Most people will say, Okay, that's great. Let's do it. Other people will say, Well, can you tell me how you calculated that? Sure, that's not going to fit on the one page plan, but I have supporting documentation that I can go and show them how we calculated it. Or, really, what we need to do is we need to do $38,000 in a Roth conversion. Some people will say, okay, great, let's do it. Other people will say, show me the math. Why are we doing that? We have the supporting documentation, if needed, but we're not going to give every piece of supporting documentation to somebody because it just overwhelms them and they don't take action.
Compared to before, what have been the results of the one page plan?
Well, first of all, it's a much better work life balance. As an advisor, it's just a much better way of life– it's much, much more stress free and it's a better experience for the client. It just gives us more time and we get together to talk where we can spend more time focusing on their dreams and aspirations and what's changing in their life, as opposed to focusing on page 37, chart 34. They don't want to see charts. They don't want market commentary. They expect us to know the market commentary.
What is your follow-up process like for people not executing their plan?
You'll see at the very bottom, we always have a next step. And what is important about having this one page plan is, I start with this as a template. And I say, Okay, where are we at? And I just shut up, and I wait, I just stare them down until they give me an answer. And then I might give them some corresponding questions if they haven't done it. You know, I thought it was really important to make sure that you leave a legacy to your children and grandchildren, what happens if you wake up two more tomorrow morning. And you can no longer make a living? You know what happens? Heaven forbid, if you get hit by a truck on the way to work, whatever the case is, right? We say these things are important. Let's take the next steps and make sure we're getting these things executed.
Alright, so what happens generally, that I see with high achievers, is if you give them two to four things, it's almost like a race to finish. And so a lot of times, I'll get an email that says, Hey, Nick, just wanted to let you know, we did XYZ. And I will send you back an email. Ryan, that sounds great. It looks like the only thing that you missed on your list was getting your estate planning documents done? What can I do to help you make sure we get those executed? And then I'm on my way, I call them whatever the case is, and then I just put a tickler on our file a couple weeks out– Hey, Ryan, you sent me an email at the end of January. And I just wanted to follow up, just wanted to confirm you have your estate planning documents done? Could you send me a PDF when those are completed, whatever. And I just don't let go, don't give them new tasks until those are done. And that's how we make sure that life insurance gets enforced. That's how we make sure that we have disability plans in place.
That's how we make sure their estate planning documents get done. I promise them no matter how painful it is to make those decisions to execute on those documents, you're going to feel a thousand times better once it's done. And there's nothing you can't do with a glass of wine and 45 minutes. You know, this is not a three to five hour time commitment to get these things done.
Why do you feel people are putting off estate planning, beyond the fact of confronting death?
I think it's a hard conversation to have, especially when you have young kids, which a lot of our clients do. Who's going to look after the children? Who’s gonna take care of the kids if we're both gone? And those are super hard conversations. And I would remind people, if you don't make a decision, the court will. So these are revocable decisions, you can change these documents, but it would be best to have something in place on what you think is the best possible outcome today. But then you ask people, hey, is there a stumbling block? Is there something that's keeping you up at night? That's, that's preventing you from executing these documents? Is there a reason? You seem to be an incredibly high achiever. And if you and you've gotten everything else done, there's just this one thing that you haven't done, is there a reason why, and it may not be the estate planning documents, it might be somebody that has medical bills, and maybe they're just mad because they have these medical bills, and they don't think they should pay them. So you can be mad or not, but it's going to ruin your credit. If you don't pay him, then having good credit is pretty important. So whatever the stumbling block is, we just tried to dig a little deeper and play amateur psychologist to make sure that we can try to get in the “doing business,” and making sure that they take the next step towards improving the situation?
Do clients go on a different follow up process for people who have completed what you said?
Whenever we take on a new family, for the first 18 months, we're trying to get done the bulk of the heavy lifting, right. After the first 18 months, we hope that we have implemented as much as possible of the protection type of needs. And then from there, it's mostly into that maintenance type of thing. And then they will meet us in spurts. Right, whether I tell people we might meet nine times in the first year. And that's, that might be what we have to do to get this plan. But after that it might be once or twice a year over the next decade. But then, heaven forbid, you might have a parent pass away, or you receive an inheritance or you're preparing to sell your business, we might meet 10 times and in two months, right. So I think the relationship goes in spurts. We just want to make sure that when we are meeting with people that we are providing a lot of value. And we're just going to come right at them with the truth and what we think the simple, concise and next steps are, sometimes our meetings are as short as 15 minutes. Sometimes, they're much, much longer, but we're trying to get the bulk of the heavy lifting done within the first 18 months.