All That And The Kitchen Sink
Yes, All That and the Kitchen Sink
Imagine: you’re sitting in an emergency room suite. Just 30 minutes before, you had cut your hand while slicing some onions for a new recipe. You’re probably going to need stitches. The doctor comes in and says, “Patrick, I see that cut on your hand, but are you sure that’s all that’s wrong with you? Maybe we should check your blood sugar? How about running a CAT scan to see if you have a head injury? Not that? Maybe, we should launch a sleep study to ensure that you are getting the optimal amount of sleep for your age?”
If you’re like me, you’d probably be looking at the doctor saying, “First off, what do you mean ‘are you sure that’s all that’s wrong with me?’ Second, just fix the cut please. We don’t need to get into that other stuff right now.” This is not to say that any of the “extra” stuff isn’t important. On the contrary, it very much is, but it would be odd for you to show up to the hospital with a cut and for the staff then to run a full battery of tests on you for entirely unrelated ailments.
In the world of financial planning, it can often feel much the same way. Someone comes in with a question, like “Should I refinance my mortgage?”, or “How much should I put down for my car?” We say, “Well, hold on a second, are you sure that’s the only thing wrong with you? Do you have 5 years of brokerage statements that you can share with me? What’s your allocation split between stocks and bonds? Do you plan to leave money to your kids, and can you trust them to use it wisely? How about your spending? Do you have a handle on how much you spend to the cent monthly, quarterly, and annually? What about your goals for the next 35 years? Have you thought about them?” All these questions are exceptionally important and help point us to an optimized financial plan for the person, but the whiplash from one seemingly innocuous question to the deluge of follow-up questions and information requests can leave the questioner dazed.
We have been using the Elements Financial Monitoring tool to help us get clients' critical questions answered quickly. This purpose-built, phone-based tool allows us to make decisions and answer the question, “am I doing, ok?” or most other financial questions that a person might have. This scorecard system reviews the broad categories of financial planning and puts them into easy-to-understand metrics with which we then use to work with the client to illustrate where they are and where they are going. The scorecard considers in and out flows like spending, savings, debt, and taxes, how much risk you are taking in your investment and insurance portfolio, and where you are on your journey towards financial independence. Think of it as your new product, marketing, or sales scorecard for your personal finances.
We can answer any number of questions, as general as “am I doing ok?” and as specific as “if I save this much money over the next few years, will I be in the position to retire when I want to?” This also enables us to get a sense of your finances, so we can more efficiently ask the other questions that you might not be thinking about. We can also get away from the most maddening answer to a question in financial planning and from my days with Cummins and Six Sigma: “it depends” (accompanied with a smug looking smile). In addition, the tool allows you to quickly get a sense of where you stand at the tap of a finger, whether you’re at dinner, on a hike, or waking up at 3am with an idea.
We see this application as a complement to the other tools in our toolbelt, like long term retirement planning and model portfolios. It expands our ability to meet you where you are and get to the answers to your key questions quickly without going through the whole battery of tests, like the doctor wanted to in our imaginary emergency room visit. Over the next few months, I am going to work through deep diving the scorecard components and answering some people’s questions using the scorecard. So, if you have a burning question that you want answered, anonymously of course, please reach out to me at patrick@wwafp.com, and we can work on getting it answered for you.
