014: The Secret to (Profitably) Tackling Complex Financial Planning Situations

July 25, 2018

As a financial planner, you become accustomed to seeing certain types of financial situations over and over again. However, some clients have very complicated and singular financial situations that can prove challenging. For example, planning for elderly parents brings out unique challenges. Business owners often have more complex tax situations. Expats who retain investments in their home country may have a tangled investment situation. Today’s guest knows a lot about dealing with some of these more complex financial planning situations and most importantly he knows how to make the client engagements profitable.

Jason Heath is one of Canada’s best-known fee-only financial planners. He is a Certified Financial Planner (CFP) with Objective Financial Partners in Toronto, a personal finance columnist for the Financial Post and MoneySense, and a regular contributor at RetireHappy.ca. Jason has been providing fee-only, advice-only financial planning since 2001 and has a particular interest in working with clients with complex planning issues. Listen to the episode to hear more about Jason’s background, how he overcame the challenges to build his practice from the ground up, and how financial planning has changed over the last 20 years.

Topics Discussed in This Episode:

  •     What Jason’s firm does for their clients
  •     What type of clients Jason’s firm serves
  •     Jason’s background and how he got into financial planning
  •     How to distinguish fee-only financial planning from fee-based investment management
  •     How a financial planner can collaborate with other professionals, including accountants, insurance agents, and investment advisors
  •     The kinds of issues a planner can encounter when working with Canadian expats
  •     Financial planning issues that business owners deal with
  •     Jason’s approach to planning for elderly parents
  •     How Jason’s firm can serve a range of client types profitably
  •     How to approach pricing for different levels of client engagement
  •     The average flat fees and annual review fees for Jason’s firm
  •     How financial advice delivery has evolved over the last 20 years
  •     Challenges Jason has encountered while building his practice
  •     To what Jason attributes his success
  •     Jason’s advice for listeners

Links and Resources:

Jason Heath

Jason’s Twitter

Objective Financial Partners

Quotes from Jason:

“In the past, clients would hire us for financial planning, and now I find people are contacting us for a financial plan. And I think the distinction is important.”

“It’s very interesting the conversations that I’ve had with clients over the past year that either conflict with what their accountant has told them, or they haven’t had one with their accountant at all.”

“I think it’s a practice area that should be even more developed – more family meetings going on between aging parents and their children, more children proactively talking to their parents about their estate planning and their finances.”

While Jason got his start in theatre school, he’s since found his passion offering clients truly objective advice on complex financial situations. Here we’ll cover the following key points from the show:

  • Fee-only financial planning vs. fee-based investment management
  • The two keys to (profitably) serving a wide range of clients
  • Why the flat fee?

To learn more from Jason, including his insights into working with expats, business owners, and elderly parents, as well as the challenges of recurring income and more, catch the full episode through the link above or on iTunes or Stitcher.

Fee-only financial planning vs. fee-based investment management

There’s still confusion out there about what fee-only financial planning is, so we thought we would start by clarifying it once and for all. Fee-only planning is very popular lately in the media (and for good reason!), so it’s not surprising that folks use the label but may not understand exactly what it means.

It’s true that fee-based investment advisors do often charge a fee, but it’s typically a percentage of a client’s investment portfolio; while it’s certainly not commission-based pricing, it’s also not what we call fee-only planning.

Jason uses the terms fee-only planning, fee-only advice, fee-for-service, and advice only interchangeably to clarify what he does: financial planning advice only, for a fee.

The two keys to (profitably) serving a wide range of clients

You’ve probably heard about the importance of finding your niche in financial planning (you can hear more about that in Episode 006: How to compete and win in the Canadian HNW segment). Jason’s niche would be complex financial situations… but those can include wildly different net worths, all sorts of professions, and many geographical locations.

So how can he stay profitable when he has a range of clients with very specific needs?

Simple: it comes down to efficiency and pricing.

An efficient process is key to being profitable. For Jason, this means getting the client to do more work! Most of the data collection is done not in a lengthy billable meeting, but as homework after clients receive their engagement letter.

Jason gives his clients a detailed list of all of the documents he’ll need. Once he has everything, he can easily parse out the right information can ask for a follow-up meeting if clarifications are needed.

Hint: Jason has found this method works well, but clients almost always make mistakes in the same area: budgeting. People are really bad at estimating their actual spending! Take this into account, and make sure you discuss spending habits with your clients in person to ensure you’re getting an accurate picture.

The other part of the equation is accurate pricing. Essentially, he needs to charge for any time he spends working for a client. Jason charges a flat fee for about 90% of his work (the other 10% is hourly), so he’s gotten really good at figuring out how long different tasks take ‒ and therefore how much he should be charging a client based on their situation.

Hint: It’s easy to underestimate how long tasks will take, so account for that and plan for the unexpected. Jason finds that on any given day, he spends anywhere from one to five hours on tasks that he didn’t plan for! Make sure you have a buffer for that in your pricing.

Why the flat fee?

Jason charges a flat fee for about 90% of his work (with the remaining 10% being hourly). The biggest advantage?

Transparency and trust.

Consider this example: During a meeting with a client, you realize you’ll probably need at least two more hours to get a complete picture of their situation. You invite them to come back next week to finish the conversation then. If they’re paying you hourly, it could be easy for them to wonder if you’re deliberately extending the process to squeeze more out of them. With a flat fee system, they know you’re spending more time on them for them ‒ not so you can line your own pockets.

With a flat fee ‒ whether for a specific service or as a yearly retainer ‒ both you and the client know and agree to the full cost early on, so there are no surprises.

Hint: In his engagement letters, Jason always includes a disclaimer that if something truly unusual and unexpected comes up, he may have to charge more. Again, the key here is no surprises!

That’s it for now, but make sure you catch the rest of the episode where Jason really gets into the nitty-gritty of different financial situations. Subscribe on iTunes or Stitcher, too, and make sure to sign up below to get new episode notifications straight to your inbox.

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