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Kitces & Carl Ep 63: Delivering A One-Page Financial Plan And A Full-Plan ‘Technical Appendix’

July 1, 2021 07:08 am 4 Comments CATEGORY: Kitces & Carl Podcast

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 But it’s equally important to acknowledge that the full financial plan becomes ‘outdated’ the instant that a client walks out of the presentation meeting, and in the end, most clients simply can’t absorb the full extent of numbers and details that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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Recognizing Financial Survivorship Guilt And Strategies To (Help Clients) Cope

June 30, 2021 07:03 am 0 Comments CATEGORY: Client Trust & Communication

Survivorship Guilt is the experience of emotional distress that can result after having survived a traumatic event when others did not. These feelings can have an adverse effect on behavior, such as reduced motivation and irritability, and when left untreated, can manifest in much more serious and harmful behaviors, including suicide. Given the trauma and tragedy that people have experienced because of COVID-19 around the world, Survivorship Guilt is unsurprisingly on the rise.

The nature of the K-shaped recovery from the pandemic (i.e., how certain parts of the economy have started to recover when others have not, or continue to get even worse) has faced financial advisors with clients who may be experiencing their own form of financial Survivorship Guilt, where they may be financially ‘okay’ (or possibly even better off than they were before the pandemic), but who feel ashamed or guilty for being okay as they witness (and empathize with) others suffering extreme hardship. These feelings of discomfort may cause their clients to do things with their money they would not normally do, and that may not be in alignment with their overall financial goals. For instance, clients with financial Survivorship Guilt may feel uncomfortable about the idea of enjoying or spending money, which manifests in unusual spending habits or even emerges as suddenly-drastic charitable giving. Thus, advisors will want to be on the lookout for signs of financial Survivorship Guilt in clients as COVID-19 continues to take its toll.

Given the financial advisors’ position in their client’s lives, they may be the first people to see or recognize these issues arising. Clients may indicate that they’re feeling guilty, ashamed, or disgusted because of their wealth, or they may lament the dramatic disparity that exists between the wealthy and the poor. Fortunately, though, for advisors who suspect that clients may be experiencing financial Survivorship Guilt, there are some things they can do to help.

First, advisors can highlight the benefit of and normalize the grieving process for clients with unresolved grief. While the pandemic has interfered with the traditional ways many of us normally grieve, grieving is still an essential part of healing, and failing to bring closure to the process can cause individuals to reconcile unresolved feelings by shifting their emotions to guilt and shame. Second, advisors who have clients that are philanthropically inclined and who want to use giving as a way to process grief can ensure that they give responsibly and in ways that have personal meaning for them. Third, advisors can encourage clients to group together (virtually if need be) for social support, perhaps through a giving drive where they can share stories of their grief, talk about their giving goals, or maybe to listen to a speaker on a topic of interest (e.g., Survivorship Guilt, philanthropy, etc.). Ultimately, the key point is that advisors have tools to help clients who may be suffering from financial Survivorship Guilt cope in healthy ways. By watching for signs of shame and guilt, advisors can recognize when their clients may need support, whether from the advisor directly or where appropriate via a mental health professional. Importantly, advisors must also recognize the critical importance to take good care of themselves too, both physically and emotionally, during these difficult times, which can only help them to serve their clients even better!

#FA Success Ep 235: Aligning Your Advisory Firm With Your Own (Progressive) Values, With Georgia Lee Hussey

June 29, 2021 07:08 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 235th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Georgia Lee Hussey. Georgia is the Founder and CEO of Modernist Financial, an RIA in Portland, Oregon that offers deep financial planning services to 46 affluent households for a combination of retainer and AUM fees with a $17,500 minimum fee just to get started.

What's unique about Georgia, though, is how she actively seeks to align her own personal values with the values of her advisory firm, the values of the clients that she serves, and the impact that she creates not only for the community she lives in, but on the broader financial services industry as well.

In this episode, we talk in depth about how Georgia went through the rigorous process to qualify as a Certified B Corporation in order to create a structure that would keep herself and her firm accountable for its decisions and actions, Georgia’s “conscious capitalism” approach that prioritizing having a positive impact and running a profitable business are not, contrary to popular belief, two mutually exclusive goals, and why Georgia's clients, more often than not, view her not just as someone to whom they can delegate to, but as someone who can hold them accountable and to be more intentional with their money and financial decisions.

We also talk about Georgia’s planning process itself, which leverages the Money Quotient framework across a series of five onboarding meetings, why Georgia engages in two full-day retreats with new clients specifically to give them the space and time to discover their goals, envision what they want their lives to look like, and figure out how to align their financial decisions with those goals, how Georgia proactively discusses politics in her client meetings as a way to broaden the discussion around how the financial decisions that we make affect the world around us (and as a means of helping her clients gain better clarity around their own relationship with money), and why Georgia’s favorite part of the entire planning cycle is in helping her clients actually implement her recommendations, which can take some clients up to three years to complete because of the depth of the firm’s planning recommendations.

And be certain to listen to the end, where Georgia shares her own background as an artist coming into the financial services industry and how her own involvement with opening and running community events translated directly into generating business as an advisor, how Georgia’s first two jobs in the industry helped her figure out the sort of business she wanted to build and to prove to herself that clients would pay what she felt her time was worth as an advisor, and how that, although being the CEO of a successful advisory firm can sometimes be lonely, Georgia has found fulfillment and satisfaction by building a community of entrepreneurs and business leaders with shared experiences.

So whether you’re interested in learning about Georgia’s focus on having a positive impact both in her community as well as the financial advice industry, how she incorporates the Money Quotient framework into her planning process, or how she’s intentionally building her business to align with her values, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Georgia Lee Hussey.

Client Checklist On Document Retention: What To Keep And What To Shred

June 28, 2021 07:07 am 3 Comments CATEGORY: Practice Management

Despite the ongoing shift to an increasingly digital world of automatic electronic verification of everything from transactions to identity, the reality is that today, there are still a number of documents that individuals must be able to provide to various companies, regulators, or government agencies. In some cases, those entities will at least accept digital copies of the relevant paperwork or supporting documentation, while in other cases “original” hard-copy versions are required. Which in practice has made it extremely difficult for many households to even figure out what to keep in physical form, what can be scanned and retained digitally, what can be discarded, and what must be shredded.

In practice, though, there is no hard-and-fast rule about what documents should be retained (or not). The process of figuring out “what to keep” (in physical or digital format) and “what to shred” depends on the nature of the document and what it will be used for.

For instance, tax documents generally only need to be kept for 6 years (the statute of limitations, even if there is a substantial misstatement of income), and under Revenue Procedure 97-22, such documentation can be retained entirely in digital (and not physical) format, as long as the scanned/photographed copy contains all of the relevant information.

On the other hand, documents pertaining to personal identification (e.g., Social Security card, birth certificate, and Driver’s license) must be kept in original physical form (and should be kept permanently), along with key legal documents (e.g., Wills and trusts and Powers of Attorney), in order to be able to help prove their authenticity.

When it comes to the documentation of assets and liabilities (from real estate or other ownership records, to credit cards, mortgages, and other debt), records must be retained as long as the asset is owned (or the liability is owed). Or in the case of documentation like insurance claims, as long as the claim remains open.

Storage of key documents in practice will vary by household, but important physical documents are typically stored in a home safe, a safe deposit box (though important legal documents should not be held there, as they may be necessary to access the box, which is impossible if they’re in the box!), or even the safe of an attorney’s office. For those that prefer digital storage (for documents that can be stored digitally), external hard drives and thumb drives have long been popular, although cloud-based solutions are increasingly popular (particularly for their redundant back-ups, and the ability with some systems to designate Trusted Contacts to access the information in the event the primary owner is deceased or incapacitated).

Ultimately, a checklist of key documents to retain (and how long to retain, and in what form) can be helpful as a way to be certain that all the important documents are covered. For financial advisors, this can actually be a pathway to reinforce value for clients, by actually going through such a document checklist with clients, helping them determine what to keep and what to discard, and even offering ‘shred-it’ days for clients to help them get their own financial households better organized!

Weekend Reading for Financial Planners (June 26-27)

June 25, 2021 02:59 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with a look at the big media buzz around how Peter Thiel managed to built a whopping $5 billion Roth IRA by 'stuffing' it full of pre-IPO shares of his companies and early stage startup investments (first PayPal, then Palantir, as well as Facebook), which as part of a ProPublica investigative journalism expose is already raising questions on whether the IRS needs to further crack down on how illiquid private investments are valued when being contributed to Roth accounts?

Also in the industry news this week are a number of other interesting headlines:

A recent study on consumer preferences in retirement shows that what retirees actually care about is very different than what they expected in the years leading up to retirement, with a major focus on health, family, and purpose, and not 'just' retirement finances alone
FPA hires a new "Chief Membership Experience Officer" as incoming CEO Patrick Mahoney attempts to change the tone and focus to turn around the beleaguered membership association

From there, we have several interesting articles on the rising focus on operations and the 'business' side of advisory firms:

PFI Advisors (an operations consulting firm) launches a new "COO Society" for advisory firm operations staff to learn and train
Angie Herbers launches a new practice management Academy for advisory firms focused on the core areas of business management for a scaling advisory firm
Why COOs are increasingly becoming a partnership-track role in larger advisory firms

We've also included a number of articles on the growing focus of 'data' in advisory firms, including:

A consumer study that shows consumers are very willing to share their data with their wealth managers (more so than their own financial institutions)
How "Chief Data Officer" may soon become a key role in larger enterprise advisory firms that manage their data as an asset
The trade-offs in being a data-driven leader (and why there is such a thing as being 'too' data-driven, such that the firm misses out on innovation by looking only in the rear-view mirror)

We wrap up with three final articles, all around the theme of learning from the past to inform the future:

How "The Office" itself has evolved over the past 100 years, and why repeated calls for it to decline in popularity haven't materialized for decades
Why it's becoming increasingly popular to (once again) look to antiquity for insights about what's healthy and best for us
The fascinating link between walking outside and improving our mental health and creativity

Enjoy the 'light' reading!

Equity Compensation Planning As A Niche: Market Opportunity And Differentiated Value

June 23, 2021 07:06 am 5 Comments CATEGORY: Taxes

There are many aspects of equity compensation that benefit both employers and employees, making it an attractive and lucrative niche for financial advisors. And while some financial advisors may be met with some basic challenges to establish a practice in this space, those who invest time to learn about the industry and its planning nuances may find ample business opportunities and a rewarding level of success.

There are three primary tiers of equity compensation recipients, the first of which includes C-suite executives. These employees receive numerous and sizable grants from their company and may greatly benefit from financial planning services but, while the C-suite executive may be the most financially promising client, they are generally also the hardest to engage by advisors not already affiliated with the company, as these employees are often already provided with comprehensive advisory services (provided by a wide range of competing providers of equity compensation guidance) as part of their employer benefit packages. The second tier includes the middle management group of directors and other critical staff, who represent a client ‘sweet spot’ for advisors to target. These prospects tend to be high-net-worth individuals with substantial stock holdings and options, but without the same access to comprehensive financial guidance that C-suite executives may receive. The last tier of equity compensation recipients includes non-executives and non-key employees who tend to receive the least generous benefits. While these employees may not generate much revenue for financial advisors outright, they should not be dismissed entirely – not only do they hold potential for their own financial growth, but they also help financial advisors better understand the company’s benefit plans and can serve as a valuable referral source.

In addition to identifying and pursuing their ideal equity compensation client, advisors will also need to develop a systematic process to analyze the broad spectrum of equity compensation benefits that a company offers its employees. This process generally consists of valuation and investment risk analyses and is often followed by some degree of tax strategy modeling, depending on the complexity of the client’s benefit package and their particular planning needs. Advisors will need to gather key information not just about the equity compensation plan itself (e.g., the client’s grant summary statement and vesting schedules, along with information about the company shares the client may already own), but also about the client’s other portfolio assets and tax situation. Helping clients understand how best to manage their options through tax-efficient diversification strategies can be an invaluable service, and showing clients exactly how to optimize their assets in the broader scope of their comprehensive financial planning goals will undoubtedly go a long way not just in building client awareness and trust, but in also creating valuable referral credibility and networking opportunities through existing clients.

Ultimately, the key point is that the equity compensation niche can be an attractive and rewarding opportunity for financial advisors, and by investing resources in seeking out prospects that work for particular companies, advisors can begin to really lean into and grow their niche. Financial advisors need not be intimated by large advisory firms who may seem to be competitors in the equity compensation space, as middle-tier employees provide ample opportunities for independent advisors to offer valuable and high-quality guidance, offering both the client and the advisor a rewarding planning-oriented experience!

#FA Success Ep 234: Charging Advice Fees To Help Clients Change Their Money Script, With Yohance Harrison

June 22, 2021 07:02 am 0 Comments CATEGORY: Financial Advisor Success Podcast

Welcome back to the 234th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Yohance Harrison. Yohance is the founder of Money Script Wealth Management, an RIA based in Cedar Hill, Texas that offers ongoing financial planning services to 225 upwardly mobile young healthcare professionals for a combination of monthly subscription fees and getting paid for subsequent implementation.

What's unique about Yohance, though, is that the value he offers to his clients revolves around helping them identify and change their own preconceived notions about (and relationship with) money – their personal money scripts – to help them make money decisions that are better aligned with their financial goals.

In this episode, we talk in depth about how Yohance helps his clients recognize and understand their personal money scripts (which often influence our financial decisions without us even being aware it’s happening) and what Yohance does to help them subsequently change their money scripts for the better, how Yohance developed his niche serving physicians and other healthcare workers (and how he helps them not become a target for other family members when they suddenly start generating a higher income), and how early in his career, Yohance recognized that his lack of having a “natural market” meant that his best path to success would be to get better focused on a value proposition that could bring referrals to him instead.

We also talk about Yohance’s financial planning process itself, how he starts with a deep examination of a client’s budget to find the various paths they can take to make small incremental changes in order to make progress towards their long-term goals, how Yohance positions and prices his various monthly subscription fee tiers (ranging from Silver to Diamond) so he is able to effectively (and profitably) serve clients all along the complexity spectrum, and how, by going outside of his comfort zone to include a request for referrals as part of his email workflow (rather than asking for them in a meeting), Yohance has enjoyed the highest rate of growth he’s ever seen.

And be certain to listen to the end, where Yohance shares how he gives clients personal links to his calendar as a deliberate means of creating a business model that actively promotes access to financial information and advice, Yohance’s own experience with building diverse and inclusive teams and how the best way for the industry to attract diverse candidates is by putting diverse advisors into leadership roles, and how Yohance has come to appreciate how much greater his impact and reach can be as a financial advisor after he realized he needed to start building out his own team in order to reach more clients.

So whether you’re interested in learning about how Yohance helps his clients re-write their own money scripts, the process that he’s developed and honed around asking his clients for referrals, or how he actively works to create and promote access to financial advice, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Yohance Harrison.

Adopting A “Coach Approach” To Overcome Financial Planning Inaction

June 21, 2021 07:06 am 3 Comments CATEGORY: Practice Management

Sometimes it can be easy to misconstrue financial planning as a purely logical industry, as clear-cut as analyzing the numbers, adding expertise, and then giving clients the requisite recommendations. However, as all advisors quickly learn in the field, personal finance is often more personal than it is finance. The emotional ties that people have to money understandably manifest in many ways, and figuring out what clients want out of the financial planning relationship is sometimes contingent on getting clients to express what and why things are important to them. In short, because finances are deeply personal, good advice is built not just on a foundation of expertise and recommendations that accounts for the client’s capacity, but also on an emotional connection that allows the advisor to identify the client’s overall vision based on their values. By adopting a “coach approach” to financial planning, advisors focus on giving advice that clients will actually follow and that adapts to their changing financial circumstances and emotional priorities.

There are different coaching methods that advisors can use to better visualize and comprehend client goals, each that focuses on different aspects of how coaches can better connect with their coachees. This may range from client self-discovered solutions (International Coaching Federation Model) to an in-depth drill on who is sitting across from them to avoid giving the wrong advice or solving the right problems for the wrong reasons (the Who, How, What Coaching Model). Or it may focus on bridging the gap between what’s ‘Here and Now’ for the client and their desired outcome of ‘There and Then’ (Coach U Strategizing for Success Model). Each coaching method has its own emphasis, which advisors can choose to play to their strengths – or stretch themselves to learn new skills!

Once a client’s goals are clearly visualized, there still remains the issue of action, and at the same time, overcoming inaction. To this end, advisors can guide clients through areas that may be blocking their progress, such as by helping them tackle important tasks that have been difficult for them to complete. If a client feels reluctant or paralyzed by negative emotions, it may help to explore and identify options that clients may not have previously realized were available to them. Lastly, advisors can set up a systematic process with tools such as LifeCards and LifeMaps that can help clients lay out what their specific priorities and goals are—and give them something to be motivated about.

Ultimately, the key point is that advisors can consider a ‘coach approach’ as an effective way to bridge the gap between their technical knowledge and helping a client apply it to the relevant things that matter most to them. It can be leveraged to both onboard new clients and help existing ones move into action. Furthermore, when advisors use a coach approach, they place themselves at the intersection of a client’s life and money, which ultimately helps clients realize their life goals and achieve their desired quality of life!

Weekend Reading for Financial Planners (June 19-20)

June 18, 2021 02:55 pm 0 Comments CATEGORY: Weekend Reading

Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the big industry news that now Goldman Sachs has officially thrown its hat into the RIA custody ring as well, announcing a significant new relationship with mega-RIA Stewardship Partners, and positioning itself to compete especially for the ongoing flow of "breakaway brokers" that may prefer the storied Wall Street brand over a more "retail"-affiliated RIA custodian?

Also in the industry news this week are a number of other interesting regulatory headlines:

The SEC is once again considering further updates to the Accredited Investor rules, including the potential to increase the income and net worth thresholds (which haven't been adjusted for inflation in decades) but also to potentially allow more exceptions for those with significant education or similar credentials
The Department of Labor is preparing yet another update to the fiduciary rules that may look into not only the compensation that advisors receive, but the titles they use when holding out to consumers

From there, we have several interesting articles on the evolution of the subscription fee model:

How subscription fees open up new segments of clients that the AUM model doesn't serve, expanding the breadth of who advisors can serve profitably
An industry benchmarking study showing that growth in subscription fee service models has reached the point where retainer-fee firms are enjoying the same high retention rates as AUM firms (even through the pandemic in 2020)
Why it's so important to set a minimum retainer fee for any client an advisory firm works with, to ensure they maximize the time they're spending with clients (and prospects)

We've also included a number of articles on retirement, including:

Strategies to avoid the IRMAA Medicare surcharges in retirement (particularly by managing pre-tax retirement accounts and their later-years' RMDs)
The valid and not-so-valid criticisms of using annuities in retirement allocations
Despite decades of fears that a large segment of consumers won't be prepared for retirement, in practice a recent Gallup study shows that nearly 80% of retirees are satisfied with their retirement (suggesting that we may underestimate our ability to adapt to our retirement circumstances whenever they do come!?)

We wrap up with three final articles, all around the theme of finding financial contentment:

Economic conditions have improved dramatically since the 1950s, but our financial satisfaction has not, suggesting that the real challenge is not improving our financial condition, but preventing our expectations from growing faster than our reality?
When we are only ever limited in how much we can control in our lives, the key to financial happiness is not in having 'everything', but getting to the point that we feel we're in enough control to not need to worry about the future
While we focus heavily on building wealth in portfolios (and recovering from the decline of the pandemic), it's arguably investing in the bonds we have with our friends and family that builds the most happiness and life satisfaction

Enjoy the 'light' reading!

Kitces & Carl Ep 62: Do Vision And Mission Statements Really Matter For Advisory Firms?

June 17, 2021 07:07 am 0 Comments CATEGORY: Kitces & Carl Podcast

Although “statements of purpose” have, in one form or another, been around for centuries, it wasn’t until the 1970s (and especially into the 1980s) that the corporate mission statement really began to gain traction as a tool for businesses to state publicly what they do and who they do it for. It wasn’t long after that mission (and vision) statements began to elicit eye rolls, particularly from those who were all too familiar with businesses that would go through the motions of writing up such a statement… and then completely ignore it in practice (as Enron infamously included “Integrity” as a core value… right up until it collapsed in an accounting scandal). Yet, the practice of creating mission statements has persisted. And for the plethora of financial advisors who are striking out to become first-time entrepreneurs and are facing a mountain of tasks that need completing and decisions that need to be made, the question arises: is it really worthwhile to take the time and effort to come up with a mission statement (when starting the firm, or later once it is more established?).

In our 62nd episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards discuss what it means for financial advisors to have a mission statement in the first place, some of the key benefits mission statements bring to the table, and some practical and actionable ways that financial advisors can uncover and codify their core principles and personal code, both as advisors and as business owners.

As a first step, it’s important to recognize that most financial advisors who started their own practices did so because they decided that the only way they could help the clients they wanted to help in the way they wanted to help them was by simply going out and doing it themselves. In other words, there’s some core reason that they get out of bed in the morning, and that, in effect, is the anchor for a mission statement that clearly defines what it is that the financial advisor can uniquely do that their clients can’t get anywhere else.

From a practical perspective, the biggest benefit that a mission statement brings to the table for financial advisors is that it makes subsequent business decision-making exponentially easier. Because in practice, a mission statement can serve as a filter through which advisors can be intentional with the choices they make as they build their practices. Without a clearly articulated vision, it’s hard to be consistent when making key business decisions… which can eventually result in the business losing traction.

When it’s time to actually codify a mission statement, advisors have a few options. A less formal approach could be a brainstorming session facilitated by a series of questions that starts with, “Why does this firm exist?” and then digging into that answer by asking, “Why is that?” and “Why is that…” and “Why is that!”, several times over to uncover the advisor’s (and firm’s) underlying Why. Advisors who prefer a more structured approach can look into the EOS framework, which relies heavily on establishing a foundation of purpose and value, from which literally everything else that the firm does is built.

Ultimately, the key point is that a financial advisor’s mission statement is something that is already in them and is being used to make business decisions, regardless of whether they are aware of it or not. But without being cognizant of what that mission is, it’s easy to unwittingly make business decisions that aren’t well aligned. Thus, by discovering and articulating what that mission is, the financial advisor can gain the clarity of purpose that makes all the subsequent decisions around owning and operating an advisory firm much easier. In turn, when the advisor starts to add team members, the mission statement becomes even more important, because once there are more team members than can be practically managed by the advisor/owner (which usually happens once the headcount reaches about five or six), then the mission statement becomes the reference point from which the rest of the team can base their decisions on as well. As in the end, when team members have the tools to make the same decisions as the advisor/owner would make, it gets much easier to take the practice to the next levels.