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#005 | Active Financial Planning vs. A Rigid Financial Plan | The Innovative Accountant Podcast - YouTube
Channel: Integrated Advisory by WealthCo
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Welcome to the integrated advisory series where聽
we talk about the evolution of wealth management聽聽
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and how a client's most trusted advisor聽
their accountant will lead this evolution聽聽
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i'm your host David Udy and i'm joined by my聽
co-host partner and good friend Tim Coakwell.
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welcome back to the integrated advisory series聽
during the last episode we talked a little bit聽聽
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about the difference between a plan delivering聽
a plan and actually doing planning and i want聽聽
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to spend a little bit of time tim having you聽
explain first of all what the heck does that聽聽
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mean all right yeah um you know i think financial聽
planning as a whole um you know if you could聽聽
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kind of go back in time most organizations you聽
know the whole premise behind it was to do some聽聽
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planning run some modeling um and ultimately聽
try and get to some recommendations that lead to聽聽
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selling product right and the the usual experience聽
that clients would have is they'd get the big聽聽
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binder like we talked about it'd be overwhelming聽
they've got a whole bunch of things that they're聽聽
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supposed to take action on but the planner really聽
isn't uh too focused on helping them okay let's聽聽
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make this personal because somebody delivered that聽
right yeah the two of us yeah you know i and i聽聽
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think it it's important that uh the key learnings聽
of some of this uh we both started that way i mean聽聽
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you know the whole idea was the value proposition聽
was the i guess the the thickness and the depth聽聽
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of the binder you want to show how smart聽
you want to show how smart we were um yeah聽聽
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that that was challenging for the two of us聽
but you know but that was it that was the value聽聽
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proposition i think a lot of people and even a lot聽
of the firms that we talk today when we talk about聽聽
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financial planning that's what they think they聽
think okay well how am i going to incorporate this聽聽
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hourly billable process where i'm going to deliver聽
this this plan to people and that's absolutely聽聽
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we're 180 degrees from that today on how聽
we develop the business well and i think聽聽
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it's that just that concept that it's a聽
plan as soon as you say you've got a plan聽聽
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okay what are you going to do with it and this聽
is where this this evolution it's planning聽聽
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which means it's ongoing right you're聽
always looking at it it's not static聽聽
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and so i think the other thing that's really聽
changed to allow that to happen is technology's聽聽
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improved right um you know if you think of聽
what financial planning really is all about聽聽
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it's it's it's integrating a bunch of聽
um functional disciplines so looking at聽聽
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you know cash flow budget management retirement聽
planning and projections investment reviews and聽聽
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planning risk management looking at insurance聽
tax planning which is woven and why accountants聽聽
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in this process are so important because it聽
affects everything estate planning you know聽聽
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so there's these functional areas that require聽
experience to be able to do all of that and so聽聽
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what would happen is people would go through聽
an exercise of collecting all this information聽聽
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uh you know we they get asked a whole bunch聽
of different questions across a variety areas聽聽
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and then what would happen as advisors as planners聽
we take all that information behind the scenes聽聽
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we'd run it through some software we do some聽
math and then we come back and we try and聽聽
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justify our advice to the clients and it wasn't聽
a really collaborative learning experience and聽聽
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when you look at at what's required for for people聽
to make informed decisions they need to learn聽聽
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they need to understand and it needs to feel like聽
they get it it's their idea and technology wasn't聽聽
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in a place even five years ago to some degree聽
where you could do that and create that kind聽聽
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of information and you'd never pull up the聽
technology in front of the client because it聽聽
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was so complicated that you know you'd look like聽
you're going to fumble your way through something聽聽
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it just was not interactive right so what do we聽
you know what when we're collaborating with firms聽聽
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when we're helping these financial planners聽
within the firms and the advisors themselves聽聽
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what types of technology do we use today聽
and what's the difference of that experience聽聽
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versus maybe where we were five years ago yeah聽
you know we've uh there there's a number of聽聽
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uh tech solutions that are available to firms聽
and planners we're always taking a look at them聽聽
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we're always reviewing whether the current聽
stuff we're working with is making sense聽聽
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because it's always changing it's always聽
getting better you know five years ago it聽聽
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wasn't cloud-based you know it was on your server聽
you worked through it it was slow and clunky聽聽
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today it's cloud-based it's interactive and you聽
know you're getting to a stage where even the data聽聽
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is being pulled there's account aggregation before聽
you used to have to go through this exercise of聽聽
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getting every statement every document reviewing聽
it putting it into the system so it's come along聽聽
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ways where the focus where truly where the value聽
is in the planning process is with the client聽聽
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face-to-face it's being able to put up uh you know聽
numbers on the screen projections on the screen聽聽
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um work with the client to look at it聽
differently scenarios yeah run scenarios聽聽
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have them ask questions have them go what if it聽
happened this way and you can quickly adapt and聽聽
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make those changes before you couldn't do that as聽
you said because the system the tech was too slow聽聽
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you'd sit there for a half an hour remodeling it聽
and it was a poor experience so really it was all聽聽
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about in the past sitting in front of the client聽
and trying to justify the numbers so that you聽聽
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didn't have to do it on the fly exactly today you聽
want to do it on the fly and the technology is in聽聽
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a place well i think it's fascinating because聽
now you sit down and someone says well i know聽聽
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that we talked about we've got a second home uh a聽
vacation property uh to make sure we reach our our聽聽
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financial aspirations and our income needs i think聽
we're for sure gonna have to sell that so let's聽聽
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look at liquidating that at such and such a point聽
in the past that was then part of the binder and聽聽
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you delivered that and that's where it went today聽
it would be why don't we look at both options and聽聽
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it's fascinating in many cases you go well let's聽
run this without liquidating you know the family聽聽
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vacation property and look at that as a legacy聽
how much of a shortfall are you going to have and聽聽
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then we can model that in real time and all of a聽
sudden the client says you know what i need estate聽聽
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planning advice because i want to be able to pass聽
that to the next generation because i don't need聽聽
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those assets so there's so many intricacies聽
and being able to run those scenarios live聽聽
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um i think changes the dynamic of the conversation聽
it really does and i i also think from an you know聽聽
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being a a past uh tax advisor an accounting聽
professional you know a lot of cases we know聽聽
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there are certain solutions that clients should聽
take advantage of right okay and the challenge聽聽
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is we we had we struggled because we weren't聽
having broad enough conversations we weren't聽聽
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integrating retirement planning and projections um聽
you know we weren't making it real for people so聽聽
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a simple example would be you need a family聽
trust and it's going to save you you know taxes聽聽
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and clients that sort of look聽
at us go well i get it in theory聽聽
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and lots of people would take advantage and move聽
forward but we never really quantified it we never聽聽
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really showed them we never made it visual for聽
them to help make a really informed decision聽聽
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and i think this is where the integration of聽
financial planning with accounting and tax聽聽
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and sort of being able to model things out and聽
opportunities or solutions out to show the true聽聽
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impact you can now make it real for people you can聽
go well if we don't do it if we do the do nothing聽聽
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this is where you're going to land and you聽
may be just fine or we might have an issue聽聽
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but if we do these two or three things maybe聽
it's a holding company and a family trust or聽聽
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maybe we tweak your investments a little bit聽
this way or we do something with your insurance聽聽
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you know here's how this changes your financial聽
outcomes and how it gets you closer to your goals聽聽
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and that type of a process is much more has a聽
higher success rate of having people actually聽聽
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take action absolutely and so i think that's where聽
financial planning is going today but it's also聽聽
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not as i said earlier in the other episodes it's聽
not trying to you know eat the elephant in one聽聽
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bite people get can get very overwhelmed these are聽
complex discussions there's lots of moving parts聽聽
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it's very easy and that's the experience we've聽
gained by being in this business a long time聽聽
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is to not overwhelm people and i think this聽
concept back to plan versus planning and why聽聽
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our process in the earlier episode of discovery聽
really what we're trying to get it down to is聽聽
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we're not selling plans we used to in the past the聽
first meeting was we're going to do a plan right聽聽
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and clients would be like well i've been through聽
that or what's this mean and it just felt a bit聽聽
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daunting we now take it to a higher level have聽
a discovery conversation and then we're able to聽聽
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focus on certain elements of a plan so they may聽
be more concerned about their investment strategy聽聽
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at the moment so we can go do an investment review聽
through the accounting firms okay their financial聽聽
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planner in-house with the account has the ability聽
to review investment statements focus on ways in聽聽
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which to add more value to improve it and then聽
move it towards maybe execution with a resource聽聽
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partner or the existing investment manager聽
same thing with retirement planning we can take聽聽
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and go through a specific piece if they're trying聽
to figure out if they have enough money or they're聽聽
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saving enough we can take them through a vis more聽
of a visual exercise we can also just look at risk聽聽
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management what are the risks in your life um are聽
you positioned properly to address those and so聽聽
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i think that's a bit of this evolution is start聽
with what the client tells you is important聽聽
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um build confidence add some value and ultimately聽
the goal is to look at the whole picture with them聽聽
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sure it's holistic but but you're going to聽
let them drive the drive the bus instead of聽聽
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going you need to do it all now and i think聽
that the hardest thing to do in business聽聽
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is bring simplicity right the hardest thing to聽
do in in telling a story or getting someone to聽聽
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take action is how do we bring simplicity and聽
unfortunately when you're dealing with wealth聽聽
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management whether it be the accounting side or聽
the investing side there's a lot of complexity聽聽
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and complexity unfortunately you know it forces聽
people not to take action so anything we can do to聽聽
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simplify that process to lay it out professionally聽
makes an enormous difference the the other thing聽聽
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that i'll say is it's it's all about perceived聽
value you know i hate to break it to anybody聽聽
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but it is totally irrelevant what you actually聽
bring to the table for value the only relevance is聽聽
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the percent perceived value the client has on what聽
you bring to the table and financial plans were聽聽
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the perfect example we charged five ten thousand聽
dollars to create this static binder and none of聽聽
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it was really done in front of the client other聽
than ask the questions from one of the client聽聽
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and deliver the binder in an hour and a half and聽
then you charge them five ten thousand dollars聽聽
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we sometimes will sit down with an interactive聽
software program have the client involved in that聽聽
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just touch on the topic and their perceived value聽
was three four times more than us giving them a聽聽
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five ten thousand dollar bill right yeah yeah i聽
you know i think that at the core of that david is聽聽
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having a consulting relationship right versus聽
a uh a process that's not flexible so if all聽聽
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you're doing is positioning that you need this聽
plan there's not enough flexibility within that聽聽
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and i think where we've evolved with our process聽
yeah we can do plans we can go through look at聽聽
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everything but the experience is clients you know聽
they tend to have things they need to deal with聽聽
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and we want to be able to have a model through the聽
accounting firms that is flexible to allow them聽聽
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to focus on services and ultimately we may have聽
clients that come in and go i want to look at it聽聽
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all that's great but we've got we've got services聽
positioned that we can combine those services into聽聽
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a a bigger service offering but it's also okay聽
if you just want us to handle this piece for you聽聽
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right now and the services is the residual revenue聽
right right the services are the compensation聽聽
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and it really allows you to have a relationship聽
where the client's not looking at their watch聽聽
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going well i've been here for an hour and a聽
half or two hours what's the bill going to be聽聽
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we can add value knowing that 90 odd聽
percent of the time we're going to have聽聽
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solutions for them that are going to produce聽
long-term revenue for the firm exactly and i i聽聽
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think our what we're able to bring to the聽
table uh just from experience in working聽聽
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with firms is a sense of well what does the聽
market bear so you know if we're going to do聽聽
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investment reviews what are the fees look聽
like how do we structure it professionally聽聽
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so that it feels really not a lot different than聽
the the services and the the things that the聽聽
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firm are already doing but do it in a way where聽
the cost makes sense the structure makes sense聽聽
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but i think that the challenge with this practice聽
is if all you do is deliver that initial planning聽聽
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service uh it's really tough to to make this聽
a profitable model absolutely you know you聽聽
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hear a lot about the other learnings we have聽
in looking at u.s firms you hear a lot about聽聽
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fee only service only fee only types of models聽
with this the challenge that they have is is the聽聽
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margins it it's almost like you're selling time聽
again well you are selling time again and you know聽聽
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with personal financial planning because a lot聽
of the competition is doing it for free it's a聽聽
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challenge to try and you know find a point that聽
justifies the value that you're adding in the plan聽聽
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so that phrase drives me crazy so i'm not going聽
to let you leave that one doing it for free聽聽
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so that was exactly the comment that young you聽
know accountant basically that was working at td聽聽
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brought in and said yeah we just provide聽
corporate returns for free okay nothing's聽聽
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for free and i hate to break it to anybody even聽
this part and we're talking about planning and聽聽
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asking these questions this isn't for free this聽
is we know if we make this investment of time聽聽
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focus and understanding that we're going聽
to generate significant long-term revenue聽聽
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with that client relationship and聽
you can't do that in an hourly model聽聽
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it's impossible if you've got to track all of聽
that and then you know because so much of it is聽聽
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non-perceived value right i i think the聽
other reality of what we're trying to do聽聽
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is we're we're trying to improve the聽
financial services industry not become it聽聽
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that's a great point i think the the goal聽
there with with accountants is they've already聽聽
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structured their relationships as consultants聽
they've they've done it we don't need to add聽聽
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anything new there we just need to carry on with聽
what they're already doing clients are used to聽聽
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being proposed a service through an accounting聽
firm they understand that there's fees and they聽聽
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understand that they get value and professionalism聽
through the delivery of those services the idea聽聽
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isn't to come at them with something that isn't聽
like that where all of a sudden it's a freebie聽聽
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because as soon as they do that we've changed the聽
way the accountant is perceived in the client's聽聽
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eyes this is about continuing on with what they've聽
already built and being able to deliver services聽聽
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that add value for reasonable fees that make聽
sense and then ultimately moving them more聽聽
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towards management okay so from planning to the聽
management of the planning and i think that's聽聽
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the disconnect that firms that have built this聽
the the beauty of where we're at in canada today聽聽
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is there hasn't been a lot of failures okay we聽
gotta clean this because there hasn't has been聽聽
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a lot of participants right yeah exactly and the聽
environment hasn't necessarily supported that so聽聽
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but we have the ability to look at what worked and聽
what didn't work and there's many many examples聽聽
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outside of canada of failures of trying to make聽
this work okay the one common theme is is that if聽聽
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you want a business model where you can continue聽
to grow create sustainable growth add more talent聽聽
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add more people really deliver that comprehensive聽
model you have to be in the management side of聽聽
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that and you have to participate in the revenue聽
that's generated as part of that phase because聽聽
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it you can't uh you know being able to participate聽
in asset management we're going to talk about that聽聽
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in the next episode but being able to聽
participate in asset management fees聽聽
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being able to participate in other products聽
and services that are coming that's how you聽聽
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make this business unit really make sense and聽
that's how you get to a stage as we said earlier聽聽
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where you start to create different multiples聽
based on the value you have in your practice聽聽
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it's a critical piece and learning uh of doing聽
this right yeah well let's let's close on that聽聽
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because i'd like to transition to the next episode聽
where we're really going to focus on well what is聽聽
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how does the investment side of the business work聽
um what how do we focus that obviously we think聽聽
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of the world a little bit differently聽
on our model but more importantly the聽聽
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importance of creating that residual income on聽
an integrated basis let's talk about that next聽聽
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i hope that you enjoyed this episode of the聽
integrated advisory podcast if you'd like to see聽聽
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how much integrated advisory can boost the bottom聽
line of your firm visit integrated advisory dot ca聽聽
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forward slash calculator download our integrated聽
advisory revenue calculator this resource will聽聽
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show you how to grow your firm without having聽
to increase the number of hours you work聽聽
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visit integrated advisory dot ca forward聽
slash calculator download the free calculator
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