6 Steps To The Consolidated Planning Process

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As an advisor, your planning process determines how effectively you can deliver advice and guidance to your clients. The most successful financial advisors implement processes to produce consistent and predictable results when working with clients. Unfortunately, most advisors don’t have a process or know where to begin when developing and implementing a planning process.

Consolidated Planning spent 40 years refining the Consolidated Planning Process used by our financial advisors. This process is the basis of our work with all clients and is designed to organize, protect, and focus our clients’ dollars toward their highest and best use. The process is product agnostic and driven by time tested planning philosophy. Its comprehensive nature builds client trust and allows our advisors to capture 100% of their client’s wallet share. 

This article will give you an overview of the six steps in the Consolidated Planning Process. You’ll learn the important role each step plays from a client and advisor’s perspective. By the end of the article, you’ll be ready to implement the Consolidated Planning Process in your practice.

Step 1: The Vision Builder

Every good process begins with the end in mind, and the Consolidated Planning Process is no different. In the initial meeting with your clients, you’ll briefly summarize our planning process and share our philosophy. This helps to set the client’s expectations about your work together right off the bat. 

However, the most essential part of this initial meeting has little to do with you and everything to do with the client. After setting expectations and establishing trust, you will ask questions to help the client clearly define your client’s goals. 

Your job as an advisor is to draw out the details of these goals and to understand why they matter. You cannot accept “I want to retire at 65” as a clearly defined goal. Why does your client want to retire at 65? What will that mean to them? What will it mean if they don’t retire at 65? What does retirement look like? And so on…

Critically, you must also focus on shorter term goals that impact your client’s life today. Establish what an ideal life would look like in 3-5 years. Define what would be unacceptable in 3-5 years. Focusing on shorter term goals creates greater buy-in from your clients because the results are more tangible than a goal that is 20 or 30 or even 40 years down the road. Helping clients achieve small, short term goals builds the momentum required for larger, long term goals.

Once you have defined your client’s goals and agreed to move forward in the planning process, you will collect some initial financial data. At this phase, estimates are okay. You’ll assign homework to the client before the next meeting to provide statements and supporting documents to begin clarifying the data you’ve collected.

Step 2: The Data Clarifier

During your second meeting, you’ll bring the client’s entire financial picture into focus using the Living Balance Sheet. You’ll present an organized summary of their finances and come to a common understanding of how and why their financial world is currently structured. As you walk through your client’s balance sheet, you’ll ask questions to ensure the data you’ve collected is accurate. 

This will likely be the first time your client has seen their assets, liabilities, protection, and cash flow represented on a single page. Inevitably, they will be curious about how they are doing. Together, you’ll complete their Financial Scorecard using a simple red-yellow-green scale to measure their current status versus an optimal position in each of the four financial domains – protection, assets, liabilities, and cash flow.

Your client’s financial scorecard will serve as the measuring stick for your future work together as you seek to move each domain to its optimal position. You’ll revisit this often to track progress toward goals and as a basis for future recommendations.

Step 3: The Protection Analysis

Consolidated Planning follows a protection first planning philosophy. Our advisors believe that you must protect what you have today before you can worry about tomorrow. This philosophy shines brightly during the protection analysis meeting. 

In this meeting, you’ll take a closer look at the protection domain of your client’s financial world. Your goal is to assess how well your client is protected against several eroding factors. In other words, you’ll examine everything that could go wrong and derail your client’s chances of successfully achieving their goals.

You’ll explain a concept called Human Life Value, which is your client’s lifetime earning potential. It’s a safe bet that your clients haven’t seen or heard of this concept before. It’s not uncommon for a client to be blown away seeing their lifetime earning potential for the first time and they have the “lightbulb moment” when they realize the economic impact their presence (or lack thereof) has on their family.

After this meeting, you’ll assign specific action steps to the client to improve their overall protection. This often includes updating legal documents like wills and trusts and increasing or optimizing various insurance coverages.

Step 4: The Strategic Alignment

After shoring up your client’s protection domain, you’ll again turn your focus toward the future. You’ll show the client how their current path aligns with the goals they laid out during the initial vision builder meeting. This projection will serve as the basis of comparison for the effectiveness of alternative strategies. 

It’s rare that a client’s current path fully aligns with their stated goals. Most likely, their current path will leave them with a substantial shortfall to overcome. This reality can overwhelm many clients because they don’t know what to do. That’s where you come in to save the day.

In this meeting, you will simulate various alternative strategies that weigh factors like protection, flexibility, risk tolerance, tax consequences and inflation. You’ll show the client how potential strategic changes can put them on a path that more closely aligns with achieving their goals. By the end of this meeting, you should gain your clients agreement about which strategy is best.

Step 5: The Tactical Alignment

Once a strategy is settled on, you will move the discussion from the big picture to the nitty gritty details. You’ll begin implementing the tactical changes needed to make the strategy work. The nature meeting is always dictated by the strategy that precedes it and the other groundwork you’ve laid over the course of your work with the client. 

In this meeting, you will unveil how all of the pieces fit together from your previous four client meetings. Typically, you’ll implement changes to various savings, investment & insurance programs. Your client will begin to recognize the fruits of your labor together and feel good about putting their plan into action.

Step 6: The Impact & Evaluation

To cap off the initial planning process, you will meet with the client to assess how far they’ve come through the course of your work together. You’ll measure the success of their progress towards their goals by reviewing their financial scorecard and comparing it to their new situation.

As goals are achieved and new goals are created, you’ll continue to revisit the appropriate steps in the process to ensure continued strategic and tactical alignment with your client’s new goals. 

How Will The Consolidated Planning Process Change The Way I Work With Clients?

Planning processes increase efficiency by creating a consistent and repeatable client experience. At the beginning of this article, we told you that the most successful financial advisors are process oriented. You knew that implementing a planning process would improve your practice, but you may not have known where to start.

We outlined the six steps in the Consolidated Planning Process to give you an overview of our financial advisors’ process. This process was refined over 40 years and has been the framework for hundreds of advisors to guide thousands of clients toward their financial goals.

You learned how we begin by establishing a clear vision for the future and then developing a solid understanding of where the client is today. We explained how we first protect our clients’ todays before focusing on their tomorrows. Then you learned how we seek big picture strategic agreement first then implement tactical changes second. And lastly, you saw the importance of continually reviewing and revising to keep the client on track for their goals.

Is The Consolidated Planning Process Right For My Financial Advising Practice?

You have two options. 

The first is simple. Do nothing. In this case, you can forget everything you just read because the Consolidated Planning Process will not change the way you work with clients if you don’t embrace it.

The second option requires more work on your part, but we are here to help. You can embrace the Consolidated Planning Process and revolutionize the way you work with clients by becoming a process based advisor emphasizing strategy over product. If you choose this option, you will have a framework to more efficiently deliver advice and guidance to your clients. You will meet fewer objections to strategic and tactical decisions because your clients will be bought into the process. Additionally, you will be more referable because your clients know what to expect and have a consistent, well organized planning experience.

If you choose the second option, reach out to our team below to learn how we can help you implement the Consolidated Planning Process in your practice today.

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Published:  January 3, 2023