At the first meeting with prospective clients, it is always good to share with them the big picture of what we do as financial advisors. In our team, we share a philosophy to financial planning, and we collectively adopt this framework as something we present to our clients at the start of our discussion. By doing so, we hope to help them better understand the financial planning process.
The Personal Financial Plan Framework has four simple and clear modules:
- Assuring your income
- Building your wealth
- Controlling your financial expenses
- Distributing your wealth
The key words in each of these modules are “Assure,” “Build,” “Control” and “Distribute,” and this makes it very easy for our clients to recall using the simple acronym ABCD. Incidentally, they are also arranged in a rather chronological sequence. Let’s look at each of them in a little bit more detail.
Assure
One of the most invaluable assets anyone can have is the ability to earn. Clients will ensure their livelihood and build a lifestyle with their income. This is where we usually begin the conversation about financial planning. We want to help them assure that ability to earn. We do so by discussing the impact of two distinct unfortunate events. One is when they are unwell and unable to work, and two is in the event of an untimely passing. We ask clients to share about their aspirations, liabilities and the number of years that they would like their income replaced if any of the unforeseen events take place. By properly managing their financial risk, we secure a firm foundation to build their wealth.
Build
Clients are usually most excited to share their financial goals and aspirations. While listening to them, we carefully categorize their goals into two sections: asset accumulation and retirement planning. The first is to plan for all maturities that will happen before their desired retirement age, and the second is for anything that comes after retirement age. Once we have categorized these goals, we will rank them by importance and urgency. We will also find out more about their risk appetite, inclinations and preferences before making any financial recommendations.
Control
As the clients progress on their goals, it is also very important to highlight the potential financial expenses that may affect their portfolio, such as tax and debt interests. In this module, we find ways to help our clients make more tax-efficient investment decisions and to also ensure that they make all eligible claims for their tax deductions. We also review their mortgages and other financial debts to help them lower their interest payments. By paying attention to these items, we can help clients keep outflows to a minimum so that they can better achieve their goals.
Distribute
Finally, we help clients share their wealth with their families and loved ones through careful distribution. Our discussions with clients are separated into two sections: wealth distribution while they are alive and after they’ve passed on. Clients may want to plan for their children’s education, provide for their loved ones or even build a charitable organization. We help our clients achieve these intentions even when they’ve passed on through proper estate planning and execution.
In summary, this framework has allowed us to connect very effectively with our prospective clients. They find clarity in this approach and are more confident to make decisions with us. Existing clients can also communicate their intentions more efficiently by using the simple keywords that we use in our framework.
I hope this idea will help you improve your business, and I wish you every success. Remember, it’s as simple as ABCD.
Chee Hong Gan (Vincent), ChFC, CLU, is an 11-year MDRT member and a Silver Knight of the MDRT Foundation. He is an active MDRT volunteer and has served on numerous committees and as Divisional Vice President. Gan is a senior director at Great Eastern Financial Advisers in Singapore and focuses his practice on comprehensive financial planning for his clients, the majority of whom are professionals, managers, executives and business owners.
