The Five-Minute Financial Plan?
But many experts feel that not all situations call for a detailed and extensive financial plan. Industry expert Michael Kitces wrote a piece in his Nerd’s Eye View blog addressing the possibility of financial advisors using a simple one-page financial plan to facilitate client discussions instead of printing out a quickly outdated financial plan on a ream of paper.
“To the extent planning software can be used more interactively and collaboratively with the client, the less it’s necessary to print out the voluminous plan in the first place. Which means the construction and the delivery of the financial plan may simply need to be reshaped to a process that pushes the collaborative use of the financial planning software to the forefront, with the supporting plan details printed (later) for supplemental support (to validate the plan), and reducing the bulk of the plan itself to little more than the recommendations and action items that emerge out of the collaborative planning session,” Kitces said.
Along the same lines, FinMason and Orion Advisor Services just released a light financial planning tool on the platform called The Five-Minute Financial Plan that can create a simple and intuitive financial plan that clients can understand, even if they have no financial training whatsoever. Instead of a lengthy data collection form, the advisor and client/prospect can interactively adjust key assumptions to a financial plan and instantly see how changes effect their goals and retirement on an easy-to-read chart that shows their savings growth over time. While it does not have all the functionality of a high-end system, it quickly and intuitively shows the client the interplay between a small, but powerful set of inputs:
• Savings Rate
• Income in Retirement
• Portfolio Risk
• Large purchases/expenditures
• Retirement Age
• Longevity