Toward the end of the All the Money Conversation™ there's the following statement, "And there you have it. Any surprises so far?” What does the "it" refer to?
The client will decide what “it” refers to. And it doesn’t really matter whether they view the question from, only the All the Money Conversation™ or the entire Financial Road Map®.
How do you complete the insurance section? Some types of insurance aren't easily summarized by a number, for example auto, disability, long-term care, etc.
Sure they are. Insurance is all about numbers. Disability has a benefit amount, that’s what goes in the box on the back of the Financial Road Map™, a premium amount, and an elimination period. 3 key numbers. Long Term Care: benefit amount, duration, and premium Auto: Benefit amount, premium, and deductible. Sometimes the benefit amount is “replacement value.” That’s a good number. Insurance is all about numbers. You pay in and hopefully, when you need it, they pay out. The main number you are looking for, for Financial Road Map™ purposes, is the amount it pays when they need it.
If we cannot charge a fee now, but may be able to in the future, how do you recommend discussing this with clients when we complete the Financial Road Map?
First of all, fix that “We can’t charge a fee” aspect. In the meantime, charge what you charge, the way you charge. As soon as you know what you will be charging, and when, tell them that also so they are clear what they are signing up for.
What is the course of action if the Ideal Client agrees to move forward after the Commitment to Hire Conversation, but does not carry a check-book (very few people these days do)? Are documents accepted? Is the follow-up meeting planned? Work started? Etc.?
When you schedule the appointment ask them to bring their checkbook. If they don’t bring it, just have them mail one.
Does the Financial Road Map® differentiate between the resources used to fund Goals vs. those used to fund Lifestyle?
Current lifestyle is funded from cash flow. Future goals from savings and investments. Only a person who is no longer working and living off their assets will have a goals related to “maintaining our lifestyle” which would be funded from assets.
Under my current model, there are different means of compensation, depending upon the deliverable (I.e., planning fee, % of AUM, insurance commission, other). It seems that the planning fee would logically be part of the Commitment to Hire. When would the other pieces be brought into the discussion?
It is. Almost every time you offer to be hired they will ask how much you charge. Just tell them. It tends to unfold very similarly to how it unfolded with Robin and Larry on the DVD in Mastery Series #1.
How do we respond to someone when they say, "$7500/per year (our PMARR) is a lot of money?”
"As your new financial advisor, I would not recommend that you hire me if you could not afford me. I have no doubt in a year from now that you will wonder how you ever lived without me and feel that the $7,500 is a bargain. Would you like to get started?
I want to create a concise answer to the question of what do we charge. You mention two things and I can't reconcile them. Either "set a Predictable Minimum Annual Recurring Revenue and honor it for all clients" or "use an annual fee of ____ % of their net worth or assets". These seem very different. I'm fine with charging an initial one-time separate $2500 fee for creating the plan. But on going do I charge a Predictable Minimum Annual Recurring Revenue or % of assets/net worth for the 10 deliverables/3 meeting annual on-going process.
In the interest of simplicity of you and for them, you may prefer to charge a flat annual fee instead a % of assets or net worth.
Clients agree to pay for their plan (and pay at the end of the first meeting) $5,500 to have their Implementation Plan written. My annual ongoing Ideal Client Fee is $11,800. Do I collect this (annual ongoing fee upfront) from them at the same first meeting or do I do it at Implementation Meeting?
You can do it any way you choose. Many advisors bill it quarterly and have it automatically deducted from an account, usually their money market account.
After completing the Financial Road Map® Interview with friends to help me get more experience, they decided to get a financial plan done. I relayed the cost of completing the plan, but not the cost of an on-going relationship (as I was unsure that was the best time to have that discussion being fairly new to the process). I am meeting them Saturday morning to have a pre-planning meeting. What is the best practice for inviting them into my Ideal Client community at this point and discussing the annual fee (I am thinking $10K...this would be my first Ideal Client invite)?
Your answer to your question is perfect. When it's time to tell them how much the ongoing relationship costs, just tell them how much it costs. If they have any other questions, just answer them directly and transparently until you come to an agreement to do business... or not. Remember, every time you answer a question you finish with a question. eg; Does that answer your question? Are you ready to proceed? How else can I help you feel good about your decision to hire me to help you get your entire financial house in perfect order and keep it that way forever?
After completing the Financial Road Map® Interview with friends to help me get more experience, they decided to get a financial plan done. I relayed the cost of completing the plan, but not the cost of an on-going relationship (as I was unsure that was the best time to have that discussion being fairly new to the process). I am meeting them Saturday morning to have a pre-planning meeting. What is the best practice for inviting them into my Ideal Client community at this point and discussing the annual fee (I am thinking $10K...this would be my first Ideal Client invite)?
Your answer to your question is perfect. When it's time to tell them how much the ongoing relationship costs, just tell them how much it costs. If they have any other questions, just answer them directly and transparently until you come to an agreement to do business... or not. Remember, every time you answer a question you finish with a question. i.e. Does that answer your question? Are you ready to proceed? How else can I help you feel good about your decision to hire me to help you get your entire financial house in perfect order and keep it that way forever?
How do you determine what Planning Fee is appropriate for each client? I would imagine that different client circumstances require a different Planning Fee. You mention on tape from $2500-$3000. This seems high to me.
I appreciate that you are new to Values-Based Financial Planning™ and I'm reading in between the lines that you may have a perception about working with people who can truly pay you the amount of money you actually need to earn in order to run your business, pay your taxes, pay for the present lifestyle you want, get your own financial house in perfect order and keep it that way forever, and fund your future goals. Start thinking in terms of clients who pay you AT LEAST $10,000 / year to have you as their Trusted Advisor. You might also want to start doing the math about how much each of the items I described. We are going to help you become one of the few Financial Advisors who actualize what's possible in this business instead of one of the many who don't. You can earn your Ideal Life Income, have time freedom, and help people. Try not to let your limiting beliefs slow you down. For now, just do as many Financial Road Maps® as possible with existing clients and prospects and...
Is the insurance listed on the Financial Road Map® in that order for a particular reason? If yes, should the insurance grid mirror this order? As I was putting together the grid, I realized it made it easier to quickly refer to them if they were in the same order - and not risk leaving something important out. What drove the choice of order for insurance on the Financial Road Map®?
Feel free to use your own process instead of the back of the Financial Road Map® to do the math and capture information during the All the Money Conversation™ portion of the Financial Road Map® interview. What's on the back of the Financial Road Map® is simply one option.
I recently had an experience where I had push back from a client when I asked for where all of their assets were located and then found a very small asset at another firm that they had opened up recently. It kind of irritated me and I asked why they had bought the policy. The client responded a little negatively and now I am wondering whether or not I should re-engage them with the Financial Road Map® and ask the Commitment to Implement Conversation™ questions or politely tell them that I do not want to work with them?
It's hard to say whether the client responded negatively because of the situation or because they responded to your irritation. Either way, you and this client have some relationship work to do. My advice is that you tell the truth about your expectations and ask them what they think about being a client at that level. Relax. Be open. And enjoy a candid, honest exchange. Try not to get irritated.
How do you deal with paying off debt as a tangible goal when the clients only have a mortgage at a low interest rate and it doesn't make financial sense to pay it off ahead of schedule?
As your client's financial advisor it's your job to give them the best advice. If the best advice is to keep the mortgage then give them that advice. There are also emotional considerations for any goal and debt, especially, can have some powerful emotional motivations. If you have a client who despises having any debt and paying it off will not inhibit the achievement of their other goals then the emotional benefit to the client may outweigh the technical "financial sense" of keeping the low interest debt.
Should I let the client explain their financial documents? I find that it's often easier if the client explains their financial documents, since they know how to best interpret what they've brought.
NO! The All the Money Conversation™ exercise is a math exercise that should take no more than 10 minutes. Watch the Financial Road Map® video for the demonstration of how this should be done.
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