Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
I’m going to guide you through a process to overcome the four major ways planning for female executives gets derailed. It starts with understanding where women want to go, i.e., their goals for life. I don’t even talk about numbers or money until further on in my process. Instead, I spend time exploring what is important to them in life personally, professionally and financially.
Once those values have been laid out, I dig into the details. I find out exactly what’s involved in sending a client’s kids to college, paying off their home or buying a new home, growing their business or getting a leadership role in their industry, both from a numbers standpoint and a timeframe standpoint. I talk about the different options available for achieving those goals, examine how each option would affect the bigger picture of their life, and decide which plan feels the best.
The next step is getting a good picture of where your clients are with regard to their finances. I’ll dive into a comprehensive analysis of their lives, looking at everything from homeowner’s insurance and risk management, to investments and the contributions to their 401(k)s. I’ll have a clear picture of where they are financially.
Once I know where they want to be and where they are currently, I identify the gaps in-between and come up with solutions. Typically, there are at least a few options for bridging each gap, so we’ll try on different scenarios for size, and see which one feels like the best fit. Once we know what is important and what they are willing to do, given what we have to work with, we come up with the action plan.
Introspection into your best life
This process works, but it can’t happen without some deep introspection into your client’s best life. The number one way plans are derailed is because most female executives never take the time to articulate – even in their own minds – what they want their lives to look like.
I can’t tell you how many people sit down in my office and immediately lay out exactly how much money they have in their 401(k) accounts. I understand why they do it – for the vast majority of people, financial planning means one thing: numbers.
Instead of numbers, though, I prompt them to think about living life. Helping them consider their passions and pursuits forces them to think outside of vague future concepts and instead reflect on the specifics of how they want their life to look in one, three, five and 10 years.
For some clients, thinking this way presents a real challenge. They might not have given themselves permission to think about their ideal life in years, even decades. They go to work, get a paycheck, and try to save money for retirement. They haven’t been given a chance to sit back and ask, “What does my dream life look like?”
On the other hand, there also are clients who have incredibly (sometimes unrealistically) lofty goals for their lives, given where they are starting from. But that doesn’t mean I can’t help them. It simply means they are disconnected from the way they live now, and what it will take to get to where they want to be. They know where they want to be, but they haven’t yet grasped that without a plan, their future will be the same as their present. Until they know where they want to go, they will remain stuck on that treadmill.
I love seeing the change that comes over my clients when they discover the power of having goals and a plan to achieve them. Identifying their best life motivates them to follow the plan and engage with the process. Once they do that, they are amazed by how empowered and positive they feel. It’s so much more than numbers. It’s a holistic life satisfaction that they never thought they could have. It allows them to transition to jobs that give them more satisfaction. It empowers them to live in places that make them happy to wake up in the morning. It gives them courage to make the kind of changes they have longed for.
I have experienced this kind of transformation in my own life, thanks to the same strategic financial planning principles I use with my clients. I want everyone to have the same opportunity I’ve had to do something they love, to benefit from hard work, and to enjoy quality of life.
Once you’ve specified your clients’ passions and pursuits, the next step is analyzing their current financial situation. The cornerstone of this step is taking a deep dive into cash flow management, the solution to the number two derailment.
The analysis starts with a balance sheet, which lists your clients’ assets, liabilities and net worth. A balance sheet is essentially a snapshot in time that shows what your client’s life looks like in terms of finance, in this moment. There’s no judgment around it – it’s simply an accurate picture of financial health.
Next, I assess where their money is going every month. In addition to tracking expenditures, I go through all insurance documents, estate plans, retirement options, tax returns, and every investment account they have. All this work yields a crystal-clear picture of where they are financially.
Following this financial analysis, I explore strategy around the source of their money, i.e., their career. The way they make money is, after all, a major component in their quality of life, and not just with regard to the amount they earn. The ways in which their job contributes to (or detracts from) their life as a whole must be considered alongside the financial benefits it brings. Both are equally important.
At this stage in the process, I come back to their passions and pursuits to ask more detailed questions around their career. In a perfect world, is this the job they like to be doing? Do they want to stay in the same industry until they retire? Do they want to climb the ladder and be the CEO or director of marketing? Do they want to sell their business someday, and if so, when do they envision doing that? All in all, what do they want out of their career?
Whatever your clients’ ultimate professional goals, achieving them starts with asking these important questions and comparing them against where they are now. This part of the process will identify the gaps between the career they want and the career they have, and understand the tools they can use and the changes they need to make to start working on their own terms.
The next step in the process is strategically leveraging traditional financial solutions. One area where traditional financial planning gets it right is in optimizing tax situations and aligning the best investment strategy with their goals.
However, just as there is no one-size-fits-all solution for financial planning, there is no one-size-fits-all way to approach tax and investments. Every woman’s best tax strategy depends entirely on her individual life, and her investments chosen should be based on her personal goals. Their finances and future goals determine the best business structure for their company, the right accounts for allocating their resources, and the precautions they need to minimize liability and risk. As for investments, they should be smart, tax-efficient and inexpensive strategies that are in line with your clients’ goals and comfort with risk.
Creating a tailored plan
Once your clients have thought through everything that is important to them, designated their goals, analyzed their starting point, and created a plan of action for incremental change, it’s time to put that plan into action. The crucial first step of implementation is putting their plan in writing. Not only will having a written plan make the chances of success exponentially greater, but it also ensures that if your clients’ goals shift or life throws a curveball, you’ll be able to seamlessly build those changes into the plan without losing momentum.
This is another area where traditional financial planning fails clients. It’s rare that financial plans are designed to be flexible around changes in a client’s life, goals, or circumstances. However, planners seldom check in with their clients to see how the plan they’ve created is working in practice. As a result, when the client’s life takes an unexpected turn – as life so often does – the plan goes out the window, and the client is back where they started.
After spending so much time and energy on creating a plan, the last thing I want is to lose accountability and focus. As a planner, it is essential to circle back with each client at least once per year, if not more often. I remind them of what we set out to do and check in on how things are going for them.
Your clients can and should do the same thing as they work through the plan you’ve created. By having a one-page plan summary that includes a clear list of action items, your clients will be able to efficiently gauge progress against the plan, and if their dream life has changed in the meantime, make any adjustments that are needed. The plan isn’t meant to be set in stone; rather, it’s a roadmap that continually evolves based on needs, goals, and circumstances. The key is to always have a plan that is relevant to your client’s life, one that allows them to stay focused on their dreams and engaged in the process of achieving them.
Bridget Venus Grimes, CFP®, is founder and president of San Diego, CA-based, WealthChoice, a firm specifically focused on helping women turn their professional success into financial success so they and their families can live their ideal life.
Read more articles by Bridget Venus Grimes
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
