Last time we covered some key elements to our annual review process with clients.  We understand planning takes a lot of brain power and time, attempting to cover everything in a single meeting is not always efficient or effective for many busy clients.  Spreading out the review process over two meetings annually with different agendas yields the best planning results.  A lot may change in a short period of time.  A rolling, six month period, allows for accountability and benchmarking of goals.  Breaking things down into manageable bites works well for everyone.

Here’s more on our approach to the annual client review.

In addition to the points we covered previously, we like to cover big ticket purchases with clients during our annual review.  We view big ticket items as a purchase that may move the needle from a financial perspective.  Everyone is different, and many have differing opinions as to what a big ticket purchase means to them.  Our job is to ask questions around the financing, liquidity, reserves, and other meaningful items that ultimately impact the financial plan.  We really encourage clients to segment their cash, as we’ve discussed previously, and have an account for big ticket purchases set aside.  Funding this account, in advance of the purchase, makes it easier to attain your goals and stay on-track.  Factoring-in these decisions using current income, debt, and other cash flow considerations helps keeps the plan in working order.  We like to take it one step further and also consider exit strategies.  If you are purchasing a big ticket item, what’s the exit strategy? Do you even have an exit strategy?  This simple question engages the brain to think about other planning contingencies and choices that may not have been considered.  It’s this higher engagement and processing that helps clients think about all options before proceeding.  Having this discussion, in a proactive manner, avoids unplanned reactionary decision-making and maintains positive forward momentum around other financial planning priorities.

Cashflow drives everything in your “financial house”, both in the accumulation and distribution phase.  Regardless of where you are in life, cash flow plays a central role in your financial plan.  Understanding the variability of cash flow, bonuses, stock distributions, and other forms of compensation may allow you to ensure the right monies are going to the right priorities.  Cash flow plays a key element in our annual review process.

The definition of “retirement” has changed quite a bit in the past two decades.  We ask the following questions to better understand how our client’s define retirement from their perspective.

  • What are you retiring from?
  • What are you retiring to?
  • With whom do you envision spending time with as part of retirement?
  • How do you imagine spending your day, once you retire?
  • Does work and volunteering factor into your plan? If so, how much?

The answers to these questions will help begin to shape what retirement means to our clients.  Their definition of retirement (not ours) is the only one that matters.  Helping them determine when they may “repurpose their time” is a major theme in our annual review process.

Finally, our review process often requires clients to complete some homework.  The questions we raise, and the dialogue that takes place, often requires some reflection and thought.  It’s okay if you do not have all of the answers just yet, or if you don’t quite have a clear picture of what your retirement looks like.  Making the time to reflect on what’s possible is very important.  It’s one thing to hope for the best.  It’s an entirely different approach to plan for the best.  Planning for the best requires an ongoing conversation with a professional who can help you craft that plan and monitor your progress.

Our review process – part 1

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