I sometimes wonder if our clients and prospective clients tire of us talking about the concepts of transparency, alignment and mutual understanding. However, past experience has given me a lens through which I view those concepts, and I want to share why they’re important to me, and how a document that we created, the “Financial Blueprint,” gives them material meaning.
In our financial planning process, Cordant uses what we call the Financial Blueprint like an investor’s one-page business plan. Essentially, this is our attempt to pull together the key pieces of information that every client, as owner of his or her financial situation, needs to either define or track. Our team must have a clear understanding of what a client wants to achieve financially and the plans identified to help them get there. It’s imperative that this also be a shared understanding with our clients, so we can use our expertise to help advance them toward their financial objectives and goals.
Criminal Defense: Transparency, Hidden Goals and Outcomes
Before joining Cordant, I was a criminal defense attorney. More specifically, I was a public defender. In that role, I was employed by the county and appointed by the courts to represent defendants who were unable to afford an attorney on their own. My greatest frustration in that profession was never my clients. In fact, the people I represented are the part of the job I miss most. My frustration, and ultimately a major factor in my decision to leave the practice of law, was an often complete lack of alignment of objectives and goals between the lawyers, the judge and whichever other professionals were in the courtroom (social workers, probation officers, etc.). To further complicate matters, it wasn’t just that the goals and objectives didn’t align—at least that can be called out and weighed accordingly. Often matters were further complicated by hidden objectives and goals.
For example, take the sentencing of a client who has pleaded guilty and been convicted of a crime. A hearing then determines the defendant’s sentence for this crime. The prosecutor may see this as an opportunity to meet his objective to punish, a judge’s objective may be to rehabilitate, and the defense attorney may be advocating for her client’s main objective, e.g., do whatever it takes for the client to keep his job.
It’s no surprise that there are differing objectives in this scenario, but at least those can be identified. But now add in the hidden objectives: perhaps the judge does not want to appear “soft on crime,” the prosecutor is creating a track record for his plans to run for judge in two years, and the defense attorney is already overworked and would like to avoid having more clients in a probation system that drains her resources. Such misaligned objectives, in combination with a lack transparency of additional motivations, make resolution for even the smallest issues unnecessarily complex. Sadly, the people who suffer most are the people whose interests the whole system was created to address: the victims, defendants and society as a whole.
Unfortunately, this same problem is too prevalent in the financial services industry meant to serve the needs of it clients.
Cordant Wealth continues to take deliberate steps to achieve complete transparency in the client-advisor relationship. We have evolved our Financial Blueprint in our ongoing effort to bring meaning to that end. We believe this tool is equally beneficial to both advisors and clients. With this one page (front and back) document, we provide a reference for both the client and the advisor that is easy to read and easy to update, highlights items that need to be addressed, and is readily available at any time for the client (or the advisor) to review.
Your Financial Blueprint
The Financial Blueprint breaks down into six sections, each with specific subsections. The document may seem overwhelming at first glance, but we have a tested process that allows us to gather the information and fill in each section over time.
- Directional Items: This section includes a client’s values, mission, definitions of success, 3-5 year picture of the future, and living and estate objectives. These serve as guiding principles for financial decision-making. When they are explicitly and simply stated, we can deliberately tie financial decisions to the outcomes that matter to our clients.
- Strategy and Action: This section unambiguously states a client’s risk tolerance, performance expectations, life expectancy, target likelihood of success and annual goals. The strategy and action section sets parameters that guide execution of each client’s financial plan.
- Cash Flow, Debt Management, and Taxes: Here, we identify strategy and action related to optimizing cash flow, managing debt and minimizing unnecessary taxes.
- Asset Management: The asset management section aims to ensure that all assets material to financial well-being are accounted for and are appropriately modeled in the client’s financial plan.
- Risk Management: As it relates to life insurance, long-term care and disability, this section serves to call out identified gaps and any strategy in place to fill the gaps.
- Transfer of Assets: If a living or estate objective to transfer wealth is identified, this section aims to list the objectives and capture a plan of attack.
There is no reason an advisor and client shouldn’t have complete transparency when it comes to any given subject of the advisory relationship. Whether it’s a client’s risk tolerance, a strategy for taking Social Security or a plan for funding a grandchild’s education, both the client and the advisor should have a shared understanding of both the direction and the plan for every important aspect of one’s wealth. At Cordant, we strive to fully align client wealth with a deliberate direction and plan of action – a Financial Blueprint for your future.
If you’d like Cordant Wealth Partners to help you create your own financial blueprint please get in touch.
Give us a call at 503-621-9207
Click here for disclosures regarding information contained in blog postings.
How useful was this post?
Click on a star to rate it!
Average rating / 5. Vote count:
We are sorry that this post was not useful for you!
Help us improve it.
Thanks for your feedback!