Financial plans used to be like textbooks — too many pages, too much jargon. Now they're getting a makeover, with videos, graphics and checklists.
Advisors are rethinking their approach. They're assembling plans with lists, graphics and videos that set the advisor-client relationship in motion and engage clients.
In theory, drafting a comprehensive roadmap of an individual's financial life — a document that encapsulates an investor's money goals and strategy — should enhance the financial planning process.
But it can be tough for clients to digest too much advice and data at once. Complex planning strategies can prove hard to understand or implement. And the sheer length of financial plans, which can exceed 100 pages, leads some people to shove them in a drawer and ignore them.
"The financial planning industry has defined the financial plan as if it's a formal, legal document," said Noah Damsky, an advisor at Los Angeles-based Marina Wealth Advisors.
"The advisor might give the client this big, nebulous product as if to say, 'Look at all this work I did. I created all these charts.' But the client thinks, 'I still don't know what to do after I look through this thing,' " said Damsky.
Prune Plans, Use Lists
For Damsky, the financial plan serves more as "a guidepost to lay out a strategy" rather than a thick volume. Busy clients seek an advisor for specific needs. Get to their needs quickly.
But it's a balancing act. Clients want their advisor to provide comprehensive financial planning. They expect detailed analysis and extensive recommendations on everything from investment management to tax planning and retirement to household budgeting.
Showing prospects sample plans can help. And an advisor should educate prospective clients about the structure and function of their financial plans and why they're important.
Randy Bruns, a certified financial planner at Model Wealth in Naperville, Ill., posts samples of real financial plans on his firm's website. He wants people to see how he organizes the content and conveys his advice.
In one 14-page sample plan, Bruns begins with a 500-word summary. Then he shares retirement projections along with his observations and ideas. From there, he lists 200 numbered sentences. They are clustered under headings such as "Risk and Return" and "Your Estate Plan."
"These plans are extremely easy to write and clients appreciate them," Bruns said. "We find it's highly effective to organize our thoughts in a numbered manner, by topic. And readers can refer to a specific number when they reach out to us with a question. They'll say, 'On line 37, you mention ...' "
Instead of the traditional page layout with dense paragraphs, he finds that people prefer to read one-sentence bullets. He inserts links for supporting data and information. Some links consist of short explanatory videos that he records using Loom, a video messaging tool.
"The Loom videos are our single best discovery of the last few years," he said. "Clients love it." Bruns says videos amplify important points in the financial plan and inject a human element into potentially dry material.
Financial Plans That Look Good
Financial planning software makes it easy to design and present plans to prospects and clients. Advisors simply gather data, plug it in and produce instant results.
These programs enable advisors to run simulations and income projections. They also crank out lots of supplemental material. But there's a downside.
"With some financial planning software, you can get a 250-page plan," said Jim Sexton, a certified financial planner at Western Reserve Capital Management in Hudson, Ohio. "That's absurd."
Like many advisors, Sexton uses software to help craft a prospect's financial plan. But he customizes his approach: Rather than use a single planning software product, he pulls the best features from a general financial planning package, a tax analysis program and an income planning tool.
"Then we might add some of our own graphics," he said. Financial plans can include charts, graphs, videos, boxed elements and more.
He prints out the final plan and gives the prospect a bound copy. It's usually around 30 pages, with "the heart of it in the first five to 10 pages," he says. He's particular about the look and feel of the document.
"The cover sheet is 60-pound gloss paper," he said. "The rest is 28-pound matte with a heavy-duty black back cover. It's nice to pick up. It doesn't feel like it was spun off of a copy machine."
Create A Client Checklist
Ideally, clients treat the financial plan as a springboard to action. It shouldn't just be a reference document on investments, retirement planning, taxes and estate planning. By serving as a to-do list, it engages them and encourages them to plug gaps in their financial life.
Rodney Loesch, a certified financial planner at LifeGoals Strategies Group in Lee's Summit, Mo., designs the front section of the plan as a checklist. After an initial fact-finding meeting with the client, he produces a succinct, step-by-step plan.
"Each step in the action plan relates to an area the client wants to accomplish," he said. "There's a place to check it off when it's done. I try to make the first two or three items easy to accomplish, so there's a feeling of success early in the process." Examples include confirming beneficiary designations on their 401(k) and updating their will with their estate attorney.
"If you don't give clients some action items, the plan is just pieces of paper," Loesch said. "It doesn't get implemented."
Clients are more likely to embrace their financial plan if it addresses their biggest money concerns and offers simple solutions. That's why advisors begin by asking newcomers what keeps them up at night and why they want to hire an advisor in the first place.
Maria Marsala, a life and business coach for advisors, suggests that they choose one area of the client's financial life that's urgent. Perhaps it's generating more income or doing estate planning. Then create a three-month plan and a one-year plan to track progress in that area.
"Clients are so overwhelmed by a lifelong plan that it ends up gathering dust on a shelf," Marsala said. "It's better to simplify and show clients" a roadmap to reaching their goals.
