carGiving your clients permission to spend more money is one of the greatest gifts you can give them!

Most successful people grew up working hard and saving money. That, probably, is why they are rich now. When you do a cash flow analysis as part of this client’s financial plan, you quickly realize that they are never going to outlive their money. In fact, their nest egg is growing. They grew up believing, like their parents, that “debt is bad” and “it isn’t how much you make that counts, it is how much you save.” They are uncomfortable spending money and are living a simpler life than they deserve.

You have an obligation to give them permission and teach them how to enjoy the money they have saved. The familiar quip, “If you don’t fly first class, your children will,” applies here.

Here are some ideas on how they might use their money to further enjoy their life:

Update the family home.
This can be a good investment as well as a way of bringing pleasure to your everyday life. Most folks spend money to fix up their home in order to sell it. Why not do it now and enjoy it?

Buy that second home. Depending on your priorities, buy in a destination that will be attractive to the grandchildren. Renting a vacation home is great but owning is better.
Take the entire family on a vacation. This will build great memories for years. Friends of ours took their whole family (15 people) to Ireland for two weeks. They said it was the best money they’d ever spent.

Set up a Family Foundation.
 Include all adult family members to serve on the board. Encourage them to present to the board charitable causes they are passionate about. Allocate funds based on well-researched ideas and the passion of the presenters. This will teach the family the value of giving back, leadership, roles and responsibilities on the board, teamwork and cooperation. Benefits also can include a small stipend and improved standing in the community.

Set up a Dynasty Trust. This can be set up as an incentive trust to encourage values and behaviors that the client wants to pass on to their children. This trust typically lives on for generations but isn’t funded until the death of the client. It is typically funded with a Second-to-Die life insurance policy. Once activated, it typically pays the blood relatives a small salary based on different achievements as directed by the client. For example, they might pay $10,000/year if the child graduates from college. If they get a Master’s degree, it might rise to $15,000 and a Doctorate to $20,000. You can add special payments for the birth of a child, becoming an eagle scout and weddings. Papa and Nana can be remembered on special occasions for generations to come.

Make a difference. Feel the joy of making a real impact by giving appreciated securities to your alma mater or favorite charity. Making money is fun; giving it away brings real meaning to your achievements.

Treat yourself. Whether it’s special occasions or exotic trips, fly first class, rent a private plane, and generally be kind to yourself. You are only going to be 65 once. You have earned it. My wife rented a seaplane for my 65th birthday and flew us to Key West for lunch, followed by a boat ride and a lobster dinner on Useppa Island. We have talked about it ever since.

Remember, clients are either spending too much or too little. They are rarely spending just right. Your job as their advisor is to make them aware of what they are doing and to help them to make better choices. Supernova’s 12/4/2 program keeps you in regular contact with your clients to make sure they are spending appropriately.

Suggested to read next: What to Say to Clients that Overspend

Supernova advisors are always looking for ways to create value for their clients. Here is a quick tip that takes little time and will be greatly appreciated by your clients.

 

When talking to your clients make note of any upcoming trips, business or personal. Follow up with a phone call a few days before they leave and offer to call their credit card companies and let them know where they will be traveling so charges at restaurants, or stores won’t be flagged or refused. This will save the client embarrassment when he/she tries to purchase something. The client may not care but it looks like you are on top of their affairs.

Want to know more about the Supernova Process?  Call us for a free consultation: 866-448-7858 Ext. 702.

 

By now anyone interested in college basketball has heard the story of Brad Stevens, 37, the Butler University coach (Now the Boston Celtics coach), who became the third youngest head coach in the NCAA Division 1 history to have a 30-win season and the youngest coach to make the Final Four two years in a row.

 

Brad grew up in a suburb of Indianapolis. He was an economics major at Depauw, a small, private Indiana college and then went to work for Eli Lilly Pharmaceuticals, one of the largest corporations in Indianapolis. The problem was, he loved basketball. So he quit his job in downtown Indianapolis and went to work FOR FREE as an assistant coach at BU to follow his dream.  Now he is the coach of the Boston Celtics.

He was willing to make the change that changed everything for him. The character and integrity of Brad makes him a role model for all of us. My Butler Bulldogs lost a great coach, but the time they had him will leave a lasting impression on how to live their lives. He was the paragon of “the butler way’ ,  The Butler Way, a term framed by the legendary Tony Hinkle and used by sportscasters in the 2006-07 men’s NCAA college basketball playoffs to describe the BU team,  demands commitment, denies selfishness and accepts reality, yet seeks constant improvement while promoting the good of the team above self.

 

The Supernova program also demands commitment, denies selfishness and accepts reality while seeking constant improvement and promoting the good of the advisory team and the client above the self.  When you implement this program into your business you will see phenomenal growth while giving every one of your clients the best service they have ever had. They will thank you for it with loyalty and referrals.

 

Here is a suggestion on how to teach your clients that their monthly 12/4/2 appointments are important to them and to you.

At the end of every contact, even with those clients you speak to regularly, be sure and add this script:

“I will send you an email summarizing our time together today (see sample in “Downloads”).

By the way, I look forward to talking to you during our next regularly scheduled appointment which, as you know, is always on the first (name your day)  of the month at (name your time) time.

Of course, we are always available in case of an emergency, but in the meantime you can write your thoughts and questions in your folder (mini-me folder) on the last page so we can talk about them during our next regularly scheduled contact.”

You have not only made the client feel important but you have reminded them of the importance of a scheduled appointment in a pleasant and non-intrusive way.

In a recent article in the WSJ, it was asked, “Can you count on your broker or financial advisor to tell you how much risk is right for you?”  The basis for the article was the 2012 requirement by the Financial Industry Regulatory Authority’s requiring advisors to assess how much money clients can accept loosing.

The solution for many advisors is the use of a ‘risk tolerance questionnaire’. This is definitely part of the process in determining how to invest someone’s money, however, as the author goes on to say, “Even financial advisors don’t seem to believe the results of these questionnaires. A recent survey of more that 5,000 advisors by Cerulli Associates, a research firm in Boston, found the advisors believed 26% of clients had an aggressive tolerance for risk and only 14% more conservative where a parallel survey of more than 8,000 clients found that only 8% regarded themselves as aggressive, while 29% considered themselves conservative. There is an obvious different opinion between advisors and clients on what they think risk means.

What tools can you use to determine your client’s tolerance besides your risk tolerance questionnaire?  Monthly contact with clients can be a great tool. When you incorporate the 12-4-2 (Once a month meeting with four of those being quarterly reviews and two of those four being in person meetings) you create time with that client that you can use to get to know them on a more personal level. Use those nine touch base calls as a springboard to ask your clients those deeper questions about themselves. Let them voice their worry about the future if something goes wrong and use those concerns to design and implement a plan that more accurately reflects their needs. Your client’s will sleep better at night and so will you.

Have you ever lost a client you wanted to keep?

Here’s a low-key way to try to bring them back.  Simply send this note:

Dear (PERSONAL SALUTATION),

Recently, my team and I hired a consultant to help us revisit our client service model.  We decided to make some very significant changes.

First, we have decreased the number of clients we serve.  We now have a concierge-sized practice and work with fewer than 100 clients.

Second, our new client communication standard is best described as 12/4/2.  Each of our clients will receive a minimum of one call per month; 4 will be quarterly reviews and two of the reviews will be in-person.

Third, a rapid-response service team will return every call within one hour and work to resolve any issues within 24 hours.

Fourth, our practice is now planning-based.  Each client receives a  comprehensive, multi-generational financial plan along with a proactive investment management process that follows a prescribed risk and performance assessment.

Finally, we have found that we work best with those who have a minimum of $1,000,000 (REPLACE WITH YOUR MINIMUM) in investable assets.  Clients like you can take maximum advantage of our commitment to the highest standards of service and advice.

As you can tell, we are committed to being the best at what we do.  If we can help you in any way, please do not hesitate to call.  You were an important relationship and we would be pleased to welcome you back to (OUR FIRM).

Sincerely,

(SIGN BY HAND)

A letter like this is very professional…it’s an open invitation to come back.  Perhaps it helps a lost client realize they aren’t getting what they were promised when they moved their relationship to another advisor.

There are a number of reasons clients leave (some good and some bad) and we often let them go without even a call.  That is a mistake that confirms the client’s suspicion that they never were important.

Of course, there are clients we are glad to lose and segment away, but not everyone who leaves us is happy to have done so.  This type of letter ought to be tried at least one time for accounts and households we really want to rescue.  Supernova can be of significant help in redefining your already successful practice to clients who may have misunderstood your service promise.

Understanding the personality types of your clients will lead to greater client satisfaction and smoother relationships. Whether you use Myers and Briggs or Colors or some other model, just know that each client has a dominant style and you need to be able to understand that style and communicate with them with that style in mind.

Husbands and wives very often have opposite personality types which can lead to very different reactions to risk and reward. Knowing this ahead of time will allow you to address these issues in the right way to the proper party; making them both feel more comfortable and ultimately getting the outcome best for all.

Asking a number of probing questions during the financial planning and profiling phase can also yield a wealth of information about personality types.

For example, asking a person how they recover after a long week of work may tell you if they are an introvert or extrovert. If they prefer to curl up with a book in their favorite chair, there is a pretty good chance they are an introvert. If, on the other hand, they can’t wait to get to that neighborhood party and see everybody, they are probably an extrovert.

This may not help you with the risk issues, but it sure will explain why they always regret your client appreciation dinners.

Understanding personality types can add value to the way you deliver advice and service to your clients….build it into your ongoing service model.

Of course, please let us know if we can help.  Our exclusive website and coaching services are dedicated to helping you bring balance to your life, improve the overall focus on your practice and give you the time to grow significantly.

Do you remember Dorothy in the Wizard of Oz clicking her ruby slippers and chanting ‘there’s no place like home’ then waking up to find herself back in the warm embrace of Auntie Em? Sadly, most of the people in nursing care facilities (now referred to as independent living retirement communities and senior assisted living centers to make them sound like nicer places) wish they could do the same.  They just want to go home. But for many of them that isn’t possible because they can’t afford in-home care.  Or they may  end up signing away their life savings in order to be cared for by a Medicaid program that is wanting in every way.

As most financial advisors know, long term care insurance is a potential solution for clients in their 50’s and up.  Unfortunately, this type of planning can get pushed to the back burner.  Other planning and priorities always seem to take precedence.

And this is where, for Supernova advisors, the monthly 12-4-2 conversations can come into play.  Long-term care can be a a good topic to discuss during one of your regularly scheduled calls or meetings.

From a financial viewpoint, the best candidates for long-term care insurance are generally people between the ages of 45 and 75 with at least $200,000 of assets to protect. The American Association for Long-term Care Insurance survey found that 54% of the people who apply for long term care insurance are between the ages of 55 and 64, but 23% of those candidates are rejected due to unacceptable health conditions.   In other words, the older you get the more likely you will be to have a medical condition that could disqualify you.  And a whopping 69% of people will need some sort of long-term care during their lifetimes.

Clients might put this off and think they won’t need this care or they have enough assets to pay for their care out-of-pocket.  That may or may not be true.  The 2012 Cost of Care Survey by the American Association For Long Term Care Insurance found that the cost today for a private room in a nursing home is $81,030 for 1 year, $255,447 for 2 years and $447,741 for 5 years.  In ten years, that would run $125,704 for 1 year; $396,282 for 2 years; and $694,595 for 5 years.

If you were to opt for in-home care the costs would almost certainly be even greater. The median cost is $86,944 for 24-hour care per year.  And no one can predict how long they are going to live in that condition.

These costs don’t include other expenses you may already have in place.  For example, the home you want to go back to, medications, autos, pets, and other obligations such as taking care of your spouse.  In fact, in a lot of cases long-term care can double or more the amount of money you are currently spending.  When you measure the cost of the insurance against the risk of unexpected expenses it seems like a good hedge.

Talking with your clients about this difficult subject will increase your value to them and give you the good feeling of helping them plan for the future.  And when you include more topics like this in your 12-4-2 conversations, you are setting yourself apart from your competition.  If you need help building your client communication calendar, you should consider joining our member-only website or sign-up for one of our coaching programs.

During the last quarter of 2012 I had to navigate around the hospital/Medicare system with an aging parent who had a stroke.  My parents are college-educated, intelligent, savvy people who had always assured my siblings and me that they had everything under control.  Well, it turns out they didn’t.  And the one person who has helped us navigate the mess was their new financial advisor, Kimberly Fogg, Merrill Lynch, who also happens to be a Supernova wealth advisor.  They moved their portfolio to her one month before the stroke and she started the planning process including a financial plan, cash flow analysis and monthly contact.  But there were many things left undone due to the short time they had been working together.  Fortunately, we have been putting together the pieces – beneficiaries, end of year tax details, life insurance policies that should be cashed-in, autos titled incorrectly, too many bank accounts, and unprotected taxable assets…just to name a few.

Do any of your clients have the same issues?  Have you checked with each one? If you haven’t – make that your goal for 2013 as you hold your monthly 12-4-2 calls and meetings. Remember, one of the commitments you make to your clients as a Supernova advisor is a comprehensive financial plan that is regularly monitored and updated.  What’s more, this is an opportunity for you to have regular conversations with each of your clients that you will truly feel good about. The result will be even more loyal fans.  These loyal fans will tell their friends and family about you and referrals will happen automatically.

Take your commitment to financial planning seriously.  Make sure every client has a plan. If you have clients without a cash flow analysis create one for them. You will help them think about the future just by going through the process.  Look into their insurance needs and make sure they are met. Check on their mortgage rates, beneficiaries, wills and tax situation.

Supernova advisors know where their clients stand. They make sure their affairs are in order and update them on an ongoing basis. This takes a lot of time.  That is why you should set your minimum high enough to make sure you’re properly being paid for your valuable time. That is why you have to carefully consider the maximum number of clients you are willing to handle.  For their part, your clients will know the value you are providing and you will be rewarded in countless ways.

If you’re a Supernova member, you can download our Personal Information Update in the downloads tab of this website.  This PDF document is a great way to get the information gathering (or updating) process started. It is a not meant to replace financial plannning tools you already use. It is a guide for the designated caregivers who needs to keep the client’s affairs in order in case of illness or death. You may be surprised by how many spouses don’t know the information on this form.

Here are some simple steps you may want to consider in using this or other financial planning tools:

  1. Introduce the Personal Information Update to each of your clients during one of your upcoming 12-4-2 meetings and explain why the information is so important.  Ask your clients to begin filling-in the information you’re missing before your next monthly meeting.
  2. Check back with them during the following month’s call to see how much progress they have made. If they need a little help, you could have another member of your team set up a time to work with them.
  3. If possible, meet with your clients along with their grown children (if applicable) to go over the checklist to see if anything else is missing.
  4. Make sure your clients keep this sensitive information in a home safe or safety deposit box and it is accessible to caregivers in the event they are incapacitated and need someone to take care of their affairs.
  5. And most importantly – review it at least once a year and make adjustments as necessary.

Planning is part of your brand as a Supernova advisor.  This form is just one more tool your clients and their families will be grateful for your attention to detail.  You will stand apart from the crowd.To find out more about the Supernova Coaching Program fill out this form (click here).

There is a saying among venture capitalist, “Ideas are cheap, it is the brilliant execution of the ideas that make people millions.” Steve Job’s brilliance was the execution of good ideas. Lots of people wanted a better phone, he brought it to market. Lots of people wanted a better service model, we created Supernova. It is, however, your brilliant execution of the Supernova Model that will make you millions.

How to brilliantly service your clients:

If you would like to learn more about Supernova and these tools we use to help advisors build sustainable, referable brands, sign up for our free “Tip of the Week” by clicking here or join our membership site by clicking here

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