Financial advisors who offer comprehensive planning services often attract prospective clients in a variety of ways – through their websites, with content creation, and by referral, to name a few. In these cases, prospects are generally aware of the types of services the advisor offers. However, for an advisor who buys a book of business from a life insurance agency, clients who have had policies sold to them may not be looking to work with an advisor on an ongoing basis, let alone be aware of comprehensive financial planning services at all.

In our 73rd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how financial advisors who take over a book of business from a life insurance firm (or other product-sales-based business) can work with clients who may only be familiar with advisors working on commission, primarily focused on product sales.

Advisors who are concerned that such clients may consider a pitch for comprehensive planning as too ‘salesy’ can approach the situation by not pitching planning services right away. Instead, they can help shift their new clients’ mindset by simply helping the client assess whether the product they were originally sold is still appropriate for their situation. And by asking good questions and listening to the client, refraining from doing most of the talking themselves, advisors can engage in conversations that not only generate client trust but also provide valuable information about the client’s personal situation. Which helps advisors gradually introduce the concept of service (that will truly benefit the client) beyond sales, without coming across as too ‘salesy’.

Additionally, taking the time to discover a client’s potential pain points in their financial lives (e.g., worrying about running out of money in retirement or supporting a child’s education), can help the advisor demonstrate how they can add value by showing clients how to resolve those pain points, either in meetings with the client or through other resources provided by the advisor (e.g., emails, blog posts, or other marketing channels). While advisors might not get an immediate return from these efforts, they still ensure that clients are aware of how a comprehensive planning relationship can be helpful when they become ready to engage in one.

Ultimately, the key point is that when working with new clients who are only familiar with previous advisors focused on product-based sales, financial advisors can help shift clients’ mindsets about their role by generating trust and demonstrating to the client that they have their best interests at heart. Advisors can accomplish this by asking the right questions, listening closely, and identifying how their services can help solve the client’s unique and specific pain points. Importantly, because such clients may not be seeking a comprehensive relationship at first (at least initially), advisors should be prepared to play the ‘long game’ of consistently demonstrating their value!

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To most advisors, expanding one’s practice from a ‘lifestyle’ practice to a larger firm that is more encompassing requires two sets of skills: financial planning skills that can build and service a growing client base, and the management skills required to lead an effective team that will make strategic long-term decisions to sustain and grow the business. This generally ends out with two types of advisors in lifestyle practices: those who deliberately pursue a lifestyle practice and enjoy operating as a sole practitioner, and those who have simply settled for one to avoid the management responsibilities involved in growing a business.

In our 72^nd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how building a bigger practice doesn’t necessarily mean having to become an all-in-one manager and visionary; advisors who feel stuck in their current roles may find that by questioning some of the recurring scripts they follow (and that may actually limit their ability to realize their own potential), they can identify and seek out the right talent to help implement their vision for a larger firm!

As a starting point, advisors may wonder, “Okay, but if I don’t manage my company, who will?” To address this dilemma of finding the right help for an advisor to manage and grow their company, Gino Wickman, in his book Rocket Fuel, outlines two essential business roles: the visionary who envisions the new directions for the business to take, and the integrator who does the actual building, hiring, training, etc. Wickman points out that the visionary/integrator dynamic is quite common in many successful high-profile businesses, such as Walt Disney and Roy Disney, and Steve Jobs and Steve Wozniak.

In reality, establishing a successful visionary/integrator dynamic involves two key requirements. The first is to identify team members with unique visionary and integrator “superpowers” and to assign them to roles where their talents can be expressed. The second is the importance of establishing and fostering trust between team members. Because when a visionary introduces an integrator to the team, they have to be able to rely on the integrator not just to implement and manage the processes that support the company’s vision, but also to make the right decisions to sustain business operations. Even though this may require some initial effort to plan the role and recruit the right person, when done successfully, delegating responsibility to an integrator will eventually free up more time for firm owners to leverage their strengths and dedicate themselves to realizing their vision.

Ultimately, the key point is that for advisors who want to grow beyond a lifestyle practice, unlocking growth potential to realize something larger may be as simple as shifting one’s mindset – instead of getting stuck on the question, “How can I do this on my own?”, advisors can instead ask themselves, “Who can help me do this?” After all, advisors with a vision to grow their firm need to have the bandwidth to focus their energy on attracting clients to come to them in the first place. And with the right team in place, growth doesn’t have to come at the cost of all of an advisor’s free time; in fact, it may actually open them up more bandwidth and freedom than they’ve ever experienced before!

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Many long-time solo financial advisory firm owners with successful practices are eventually faced with the choice either to continue growing their practice into a larger-scale business, or to deliberately level growth so that they can maintain a solo ‘lifestyle’ practice. Owners who choose not to further grow their firms tend to target a different set of goals in comparison to growth-oriented owners looking to increase revenue and clientele, as these lifestyle practice owners often have goals that involve having more time and flexibility to enjoy life outside of the firm. For these owners, this can mean that they will eventually need to consider hiring team members or using outsourced solutions to help them with the tasks that they may dislike or consider too time consuming. However, small firm owners who may not have had to rely on other employees may be concerned about the extra work that comes with hiring employees, and how it might detract from their flexibility and ability to maintain their ideal vision of a lifestyle practice.

In our 71^st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how firm owners can approach the hiring decision by first considering their own goals and then deciding what kind of assistance they need to maximize their freedom while maintaining a healthy practice.

The first step for the owner is to be clear on how they want to maintain their firm. This introspection can help the owner identify their priorities so that their actions align with the right goals, and can serve as a check against ill-suited goals that might simply be based on what other businesses may be doing. This exercise can also help the firm owner draw out what exactly makes them happy, which, for many firm owners, can simply be to have a certain level of flexibility between their professional and personal lives.

Then, depending on how they want to operate their firm and the goals they have in place, firm owners can prioritize the range of responsibilities they want to keep for themselves and those they are willing to delegate. For some advisors, this could mean figuring out how to free up space in their schedule, whether it be through extending the interval between investment performance reports or finding ways to reduce time spent on email during the day. If the owner decides to hire a new employee to manage some of the firm's responsibilities, they do not necessarily need to spend more time in the office working with the new hire or grooming them to take on ever-increasing responsibilities. Technology provides opportunities for fully virtual employees, and firm owners might be surprised to find out how many potential candidates would thrive at the tasks the owners themselves do not enjoy!

Another option to help owners delegate responsibilities is to outsource tasks, potentially giving them to a part-time virtual employee or by tucking into a larger firm that can handle back-office responsibilities. This can allow the firm owner to spend more time on client-facing activities that may be the most enjoyable part of their work, while getting the back-office support they need to sustain those client relationships as well as their desired level of work-life balance.

Ultimately, the key point is that by first considering their own goals and the range of tasks to keep or delegate, firm owners who are considering outside help may find it easier to decide if they should hire a new employee or outsource the work. Regardless of the reason – whether it be a firm owner who chooses to maintain a small lifestyle practice or to transition from a solo practice to a business enterprise – prioritizing the most important work processes and streamlining (or getting rid of!) those that are unproductive are helpful exercises for any advisory firm!

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By default, financial advisors generally think that they should hold on to their clients as long as they can... ideally for the remainder of their careers. That is not, however, always the case, and as a result, news that a client has decided to terminate the relationship out of the blue can cause a certain amount of anxiety... especially when said client has a portfolio that accounts for a significant portion of the advisor’s revenue. Oftentimes, the advisor may not understand what went wrong, why the client left, and whether (or how) they should try to win the client back.

In our 69th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can approach clients who terminate their relationship with a firm without notice, the importance of understanding the reasons for the client’s behavior in the first place, and the potential opportunities that arise when clients decide to leave.

As a first step, it’s important to recognize that not all clients will benefit from lifelong relationships with a single financial advisor, because the reality is that, while a client’s original needs and circumstances may have initially set them up as an ‘ideal’ client, their needs and circumstances will almost certainly change over time, and the same advisor (or firm) may no longer offer what is best suited for the client. Accordingly, the fact that a client has chosen to leave without notice does not necessarily reflect negatively on the advisor. Instead, some clients may simply be uncomfortable about telling their advisor they’d prefer a change, uncertain about whether the conversation may become confrontational.

Yet, with the honest intent of truly understanding what is happening with the client, an advisor can benefit from learning how to better serve the client (even if that means helping the client find a more suitable advisor) and, in the process, potentially find ways to improve their practice (which can involve increasing the frequency of client touchpoints, re-evaluating how services are provided, and determining if the right services are being offered to clients in the first place). With that perspective in mind, advisors can approach the (soon-to-be-ex) client to understand why they made the decision they did, and then identify the best course of action for the client… and for the firm. Generally, advisors following this path will be faced with one of three outcomes: 1) winning the client back by addressing whatever issue was grieving the client, often resulting from a lack of communication; 2) agreeing that the client’s needs have changed beyond the scope of services provided by the firm, and helping the client find a new advisor who is better suited to meet the client’s new needs, or 3) graciously accepting that the client simply wants to leave, with no interest in sharing the reasons why, other than perhaps expressing a desire to seek out new services on their own.

By framing the conversation with the question, “Would you extend me the professional courtesy of walking me through what happened?” and not around how to keep the client’s business, the advisor can provide an emotionally neutral space for the client to express any grievances and concerns, reassuring the client that the conversation is not meant to be a confrontational plea to reconsider leaving, but instead, an opportunity for the advisor to either fix the situation, or to help the client find a new, more suitable advisor.

Ultimately, the key point is that an unexpected client departure can be be an opportunity for growth and learning, as the advisor has a chance to identify mismatches between client expectations and the services they offer, which (at the end of the day) can give advisors insight into how they can improve their practices. And having the confidence to let go of clients who aren’t a good fit for the advisor, despite the fact that it can be daunting to lose clients, can actually end out being an blessing in disguide, freeing up space for the next, more suitable client!

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In July 2021, Schwab released its latest RIA benchmark study, which, among a plethora of other things, asked advisory firms what their top strategic initiatives were. Unsurprisingly, the top result was to “acquire new clients through client referrals”, but coming in at second (and moving up from the fifth spot the previous year) was to “recruit staff”. Given the steady growth in the number of clients that advisory firms serve (regardless of firm size) over the past several years, it’s also not surprising that firms are focused on hiring additional staff to absorb the growth. But in an industry that, for much of its history, has seen a tremendous amount of turnover, many financial advisors are concerned that the advisors they hire may not stick around nearly as long as their clients, the vast majority of which stay with the firm they hire for life. Which raises the question: How can financial advisory firms structure their hiring practices to manage the risk of advisor turnover?

In our 68th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss two reasons why advisory firms may be wary of hiring additional advisors, how advisory firms can transfer the trust that’s been built over time with their clients to other advisors, and the key mindset shift that advisors should make when thinking about hiring advisors into their firm.

As a starting point, it’s important to recognize that advisors often tend to overemphasize the need to ensure that clients have a continuous relationship with just one advisor. The reality is that clients, more often than not, care more about whether they are getting the best advice and service they can get rather than who is giving it to them. Which is good news for advisory firms and is the reason that they can not only scale and grow, but can also get lofty valuation multiples. Because if the “who” part of the equation isn’t as important as most advisors make it out to be, then it means that the trust between advisors and their clients is transferable. The key, however, is communicating that transfer the right way. Advisors who cling to client relationships by saying that they’ll “be there for anything serious that comes up” end up undermining the new advisor. On the other hand, by building up the newly hired advisor and framing the move as increasing the level of service that the client will receive, the hiring advisor takes the trust they’ve built with the client and hands it to the new advisor.

With that knowledge, advisors can then address the underlying reasons why they may be reluctant to hire additional advisors. The first is the fear that, after transferring trust to a new advisor, that advisor still decides to move on. The good news, however, is that the trust that was transferred can be transferred again, which in turn speaks to the fact that clients are clients of the firm, and not any one particular advisor… just as long as the firm is ensuring that their clients are being served well.

The other fear that hiring advisors often have is that their new hires will do so well that they decide to leave… and take clients with them. While that’s always a possibility, advisory firms can mitigate that risk by using a team structure at their practice and ensuring that clients interact with other advisors and employees at the firm, because the more touchpoints a client has, the more likely they’ll stay with the firm even if one member of the team happens to leave.

Ultimately, the key point is that financial advisors who are considering hiring additional advisors to help scale their firm (but may be uncomfortable with the notion that the advisors they hire may not be employees for life) can shift their mindset to viewing clients not as clients of the advisor who services them, but rather as clients of the firm itself. And it’s the transferability of the trust that’s been built with clients over time that makes it possible for firms to grow, for employees to turn over, and for clients to stay with an advisory firm for life.

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Although there have been some incremental shifts in recent years, the financial advice industry has traditionally (and remains) geared towards attracting individuals who thrive in a career where their earnings have the potential to increase depending on how hard they work. Viewed through the Maximizer/Satisficer lens that Barry Schwartz introduced in his book, “The Paradox of Choice” (where Maximizers are those who continually strive for more, while Satisficers are those who are happy with having ‘just enough’), the advice industry is built to attract, reward, and celebrate those who tend to land on the Maximizer side of the equation. Yet, recent Kitces Research on advisor wellbeing indicates that, while an advisor’s self-perceived wellbeing steadily improves as their take-home pay increases (i.e. money really does buy happiness), the rising revenues only contribute to an advisor’s wellbeing up to a certain point (about $1.5m), and once firm revenue grows beyond that, there’s a direct inverse correlation between advisor wellbeing and revenue. And for financial advisors who want to avoid that sharp decline in wellbeing and have reached a point where their business is doing well enough that they don’t feel the need to press as hard to grow, the question arises, how can they shift their focus away from growth… and towards something else?

In our 67th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can think about optimizing their own practices for something other than revenue, why figuring out how to manage towards something other than money may contribute even more to happiness, and what advisors can do after having gone through the optimization process.

As a starting point, the first shift that an advisor can make to move away from an aggressive growth mindset is to start thinking about ways to increase their take-home pay rather ‘just’ than their revenue. Some strategies include identifying the practice’s most profitable clients, ‘transitioning’ the other (less) profitable clients by referring them out to an advisor that can do a better job of serving them, and then trying to replicate those ideal clients. Meanwhile, advisors who are satisfied with their level of income and how their practice is set up can begin to optimize for whatever it is that aligns with their own interests and goals, such as, number of days off per year, hours spent with their kids, or number of tennis matches played, to name just a few!

From there, advisors can then turn their attention towards what to do once they’ve optimized for whatever (new non-revenue) metric they want to manage to. And it’s at that point that advisors often need the most help. Because, as is often the case with our own clients, few advisors have taken the time to really think about what we would ideally like our lives to look like, and as a result, could also benefit from going through their own life planning process, such as those offered by George Kinder or Money Quotient. For many advisors, setting audacious stretch personal goals for themselves can provide a path towards getting off the growth-for-growth’s-sake cycle and help them focus their incremental time and energy in a completely different (and more positive) direction.

Ultimately, the key point is that there are specific steps advisors can take to improve their own wellbeing once they get to a point where they don’t have to work as hard to grow their business and can start reaping some of the rewards for all the hard work they put in order to get to that place. And while not all advisors have reached that point (yet), the takeaway remains that simply going through the exercise of thinking about what their goals will be, once they’re making enough in their business that they don’t need to keep growing revenue just for growth’s sake, can help ensure that they are building their business with intent and are focusing on the long-term goals that really mean the most!

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Beyond offering technical expertise across the eight primary knowledge domains of financial planning, one of the most valuable services that financial advisors bring to the table is helping clients align how they use their resources with the things that are most important to them. Accordingly, advisors create an overlap between a client’s values and use of capital by helping clients identify, set, and achieve goals. Because, as the great American ‘philosopher’, Yogi Berra, once observed, “If you don’t know where you are going, you’ll end up someplace else.” However, for some, the practice of setting and achieving goals can easily become an end in and of itself, which makes it difficult for the client to get off the proverbial goal treadmill and focused on the things that they said were actually most important (i.e., what those goals were intended to achieve). Which raises the question: How can financial advisors help clients who are stuck in the cycle of setting and achieving goals channel their attention and energy towards the things they said were really most important to them?

In our 66th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the various circumstances that might make it difficult for some clients to get off the goal treadmill, how advisors can help those clients who are perpetually unsatisfied and trying to reach towards the “next thing”, and how advisors can help clients who are nearing retirement find fulfillment outside of their career.

As a starting point, it’s important to acknowledge that sometimes it’s necessary to reevaluate and reset goals because clients may want something more or different than they thought they did at an earlier point or may achieve a goal and realize that wasn’t what they really wanted in the first place. But for clients who are stuck, the root cause of their issue may be that the goal they’ve been working towards all along may not have been the right goal in the first place (and as a result, no matter how hard they work, will never truly reach a point they’re comfortable with). Or, in other cases, it may be that the client has become addicted to the grind and can’t stop, which often turns out to be harmful to both the client and the people that matter most to them.

Such clients may benefit from (re)visiting a life-planning process (such as those offered by George Kinder or Money Quotient), or from an actual intervention, but for other clients, the problem may simply be that they do not know what to do with themselves once they’ve achieved their goals! Especially for those who are nearing (or at) retirement, and need to find satisfaction in something outside of a career that they might have spent the majority of their lives working in. For those clients, advisors can open the conversation by simply asking if they’ve given any consideration to how they’re going to focus their energy once they’ve reached financial independence, so that they’re retiring to something rather than away from something. From there, advisors can help clients brainstorm about the things that they might want to contribute to or do outside of work, and then task them to go try different things out and report back at their next meeting.

Ultimately, the key point is that there can be several reasons that people get stuck on the goal treadmill, and while perpetual improvement is an admirable endeavor, at some point, setting, achieving, and resetting goals may prove to be a blocking point that prevents a client from aligning the use of their capital with the things that are most important to them. And by identifying those root causes, advisors can help clients get unstuck and move back towards creating the sort of value overlap they were hired to create in the first place. Because, at the end of the day, the endgame isn’t about helping clients not have any more goals after getting to the point they initially wanted to arrive at… it’s helping them set new goals that keep them moving forward, in a way that’s truly most meaningful to them!
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If there is one constant in the world of investing and financial advice, it’s that there will always be a seemingly unending procession of “next great things”. Human progression being what it is, there have been some incredible opportunities for people to be rewarded for investing in innovation. However, for every “home run” like Amazon, Google, Microsoft, Ford, and McDonald's, there are just as many (or more) missteps, such as Enron, Long-Term Capital Management, Theranos, and Pets.com (to name just a few). The trick, of course, is knowing which is which, and (unfortunately) there’s just no real way to tell at the early stages. But that doesn’t stop the barrage of messaging that the public is exposed to across a plethora of media channels, telling them that they need to load up the proverbial boat in the next big game-changer and industry disruptor. And for financial advisors who (inevitably) start fielding client inquiries about such things, the question arises: what is the best way to respond when clients show interest in new (but still unproven) investment opportunities?

In our 65th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the reasons advisors are so often skeptical of new investment opportunities, how they can communicate with clients as their views evolve, and how advisors who may have previously been too dismissive of a client’s interest in a new investment can rebuild any trust that may have been lost.

As a starting point, it’s important to acknowledge the fact that people of means are frequently targeted by less-than-forthcoming salespeople with investment opportunities and products that are often too good to be true. And in an effort to be expeditious with a client’s time, advisors frequently develop heuristics to quickly filter out investments that are too new, unproven, or just plain illegitimate. However, it’s also the case that some of those opportunities do turn out to be worthy of further investigation (as was the classic case with pioneering internet stocks in the ‘90s). Which means it’s not only challenging to screen out those too-early investments… but can also be a challenge to communicate to clients who expressed interest in a new investment that was too speculative or risky if/when things may have actually changed!

In such cases, it can be helpful to reiterate that part of an advisor’s job is to manage their investments according to their timeframes and risk tolerances and in a way that aligns with their long-term goals and core principles. From there, advisors can walk clients through the process of what it takes for something to be a qualified investment opportunity, and why the fundamental risk/reward calculus may have changed. And for advisors who feel they may have been too quickly (and emphatically) dismissive of an early stage opportunity, it’s important to apologize for being short and then follow up with an explanation of the firm’s criteria for investments, and why thoroughly researching every emerging opportunity that comes along is an inefficient (and expensive for the client!) use of time.

Ultimately, the key point is that there will always be a ceaseless parade of next great things, and regardless of whether or not they pan out, all new and innovative investment opportunities have some level of speculation and risk. And while there is a place for speculation and risk, it’s an advisor’s job to ensure that changes to a client’s investment portfolio align with their values and goals. Because, at the end of the day, clients who ask their advisors about a new opportunity are likely skeptical themselves, and are (deep down) looking to be either validated or cautioned. And when it comes to clients who lobby hard for every new thing that comes along, and push back on their advisors for taking a more measured approach… then the client may not end out being a good fit for the firm if always investing in the next new hot idea is really what they want?

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In the early days of the financial advice industry, an advisor’s most valuable service for clients was simply providing access to financial products (as stocks, bonds, insurance, etc. couldn’t be purchased directly by consumers). However, the advent of online brokerages not only drove down the cost to purchase investment products, but made investing (as the slogan went) “so easy, a baby could do it”. As a result, advisors turned their focus towards building customized portfolios for clients, and rather than earning commissions on the products they sold, began charging recurring fees for managing those portfolios on an ongoing basis.  

More recently, however, ongoing technological progress has automated portfolio management to the extent that it’s now “so easy, a robot can do it”, and once again, advisors have evolved to make their main value offering the advice that they provide across their clients’ entire financial lives. Yet, despite the introduction of alternative fee structures (including hourly and subscription models) based on the delivery of advice rather than management of assets (as well as the growing consumer demand for flat fees), growth of the AUM model remains robust. 

In our 64th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how disconnects can sometimes arise between what potential clients may expect and how advisory businesses are structured to deliver advice, why the demand for quality advice continues to combat industry-wide fee compression, and why it’s been (up to this point, at least) such a struggle for alternative fee structures to gain better traction. 

Over the past several years, as more options for automated investment management have become available, consumers have increasingly sought out ‘compartmentalized’ planning engagements (i.e., advice on ‘just’ one or two, rather than on all seven, aspects of the planning process), but often run into difficulty when trying to find an advisor that has the capacity to accommodate their requests, particularly when it comes to higher-net worth clients. As while there are advisors who are able to accommodate limited planning engagements, their numbers are limited. Moreover, clients who are further along the complexity spectrum may expect the sort of service found at larger firms, which simply aren’t structured in such a way to provide compartmentalized service. 

Compounding the conundrum is the fact that it’s difficult for consumers to differentiate between advisors who actually offer advice and those who simply assume the title but may not be in the advice business. The supply of fiduciary advisors remains scarce, which (in turn) means that an advisor’s limited number of available spots can fill up quickly with clients who do want comprehensive planning (which is why so many of those advisors end out implementing wait lists). And with the high costs that advisors face to acquire clients in the first place, it just becomes impractical (at least at this point) to build a sustainable business that (primarily) serves clients on a limited basis. 

Ultimately, the key point is that, while fee structures and advisory models continue to evolve to provide better and more varied services to clients who may not want (or need) comprehensive planning, the fact remains that it’s expensive to not only acquire clients, but to service them as well. Which, at the end of the day, is why a fiduciary standard is so important for the industry, as it would drive down the cost of advice in the aggregate and would make it more practical to profitable and effectively serve clients who would benefit the most from flat-fee engagements.  

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Back in 2015, Carl Richards made a bit of a stir in the financial planning community when he published his book, “The One-Page Financial Plan”, which suggested that most important aspects of a full financial plan could (and should) be delivered to clients on a single page (effectively a form of executive summary). The appeal of this approach was offering a useful and easy-to-produce deliverable for clients (that could be updated on an ongoing basis to account for the fact that conditions and circumstances are in constant flux), and more generally was a way to reframe the concept of the ‘full’ financial plan by drilling down to just the most actionable points of advice (which is all the client really ‘needs’ to implement in the end anyway). Yet if advisors are really going to encapsulate their entire recommendations into a single-page financial plan, the question arises: can financial advisors really get away with eschewing a full financial plan, and if most clients never read the full plan after it’s presented anyway what is the real purpose of producing the financial plan in the first place?

In our 63rd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the origin story of the one-page financial plan, the key elements of a good one-page financial plan, and why it’s not meant to be a replacement for a full financial plan (which then exists as a form of “technical appendix” to provide in-depth support to validate the one-page summary), but instead, act as an executive summary of the full plan as well a reference-point that advisors and clients can use when making decisions.

As a starting point, it’s important to understand that the full financial plan is incredibly important. The breadth and depth of the work that financial planners do cannot fit on one page. But it’s equally important to acknowledge that the full financial plan becomes ‘outdated’ the instant that a client walks out of the presentation meeting, and in the end, most clients simply can’t absorb the full extent of numbers and details that are encapsulated in a comprehensive financial plan (which really functions more as support calculations to ‘prove’ that the recommendation itself is technically accurate).

Accordingly, one approach to address the full financial plans that some financial planners have adopted is to also include an executive summary, or, one-page financial plan, that is meant to provide not only a quick reference that advisors and clients to use as a guidepost, but as a living document that is easily updated as life happens and things evolve. Beyond which the entire remainder of the financial plan serves as a “technical appendix” for that executive summary.

While various planners have adapted these one-page plans to fit their needs, items that are commonly found on such a document include: a Statement Of Financial Purpose, which acts as a sort of guiding star, or overarching “Why”; a list of goals, which can be listed in such a way that prioritizes those goals which carry the least desirable outcome if not achieved; and finally, a list of the things that need to happen over the next 90 days. Put another way, the one-page plan summarizes the Why, What, and How of the larger plan, and is a tangible deliverable that advisors and clients can use as a yardstick against which financial decisions can be measured and that can (and should) be regularly updated as action items are completed and goals are achieved (or get shifted).

Which, again, isn’t to say that the full plan doesn’t (or shouldn’t) have a place in the planning conversation. Rather, the action items on the one-page plan are necessarily the result of a rigorous analysis of the client’s situation to demonstrate that it is technically accurate. And while a relatively low percentage of clients have an interest in digging in to examine the nitty-gritty of how final recommendations are calculated, for newer advisors (in particular) who are still establishing their credibility, the full plan can act as an audit trail of sorts to not only show where “that number” came from, but as a tool to boost an advisor’s own confidence levels.

Ultimately, the key point is that one-page summaries of the most meaningful and actionable information in a financial plan (i.e., the Why, What, and How) can be a powerful tool that financial advisors can use both as a living document that can be regularly updated as “life happens” and as a filter through which advisors can help their clients navigate important financial decisions as they arise. Which, at the end of the day, acts as an executive summary of the valuable analysis in the full plan and as a way to keep advisors and clients focused on what matters most.
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