Road To Independence

Last week I spent a good deal of time putting the finishing touches on a new initiative I call eVault. The plan is to roll it out during my quarterly portfolio review meetings which begin this week. I have also spent time determining which documents or information I lack so when I meet with clients I can remedy this. Some of the documents include my Confidentiality Agreement, Investment Advisory Agreement, and Financial Planning Renewal Agreement. There may also be some services I may not have discussed yet with clients, such as online account access, consolidated statements, and more.

I’m also planning to go over their goals and make sure I have up-to-date information on their family. After all, family matters. Have there been any new grandchildren? Did they do anything special for little Johnny’s birthday? I’ve never met anyone who wasn’t interested in discussing their family. So, in a nutshell, I am pushing to get to the point where every client has every possible benefit available and I know much more than just names and numbers. This business is really about focusing on the person, something I am eager to do. Let’s get back to the eVault I mentioned earlier.

eVault is a Web-based service where I will scan, upload, and store every important document for my clients. To further protect their confidentiality, I have a Confidentiality Agreement (mentioned earlier) and I also include a membership to LifeLock Identity Theft Protection Service. At the heart of eVault is the Document Locator. This is essentially an inventory page which shows the name of every document, the name and phone number of the primary contact person, the location of the original document, and whether or not it’s in the eVault. In short, it’s a client life-simplification tool. Want to look at an earlier financial plan? It’s in the eVault. How about a tax return from three years ago? It’s also in the eVault. Even if the document is not in the eVault, the document locator will show where it is and whom to contact to get that document. If something unexpected should ever happen to the client or their spouse, I may not be the first one to receive a phone call, but I will certainly be in the top five.

 What do farmers and advisors have in common?
They both plant and they both harvest.

In the financial advisory business, we plant seeds (market our services) and harvest (gain new clients). There is one additional item I’d like to add. We also service our clients. It is this area that I’d like to discuss in this posting.

I am preparing to conduct my third quarter account reviews which will occur during the first two weeks of October. At the same time, I am putting in place a system to help keep track of each client’s financial planning renewal period. That’s a lot to manage for a one-and-a-half person shop (the half is my wife who works with me part time). In preparation for the portfolio reviews, and to help me stay abreast of each client’s allocation (by account and in aggregate), I have created another spreadsheet. Let’s look at the three parts of the spreadsheet: the input, the calculation, and the output.

The Output
There are several pages which include the broad allocation for all accounts, the broad allocation for the individual accounts, an equity analysis, a fixed income analysis, a look at the alternative investments, a list of each investment, which includes their gain/loss and percentage of the account, and a page for each account which shows how far the portfolio has drifted from the model.

With this, I can easily determine what changes need to be made by sub-allocation. In other words, how much to add or subtract from Large Value, Intermediate Term Bonds, etc. It is an extremely helpful tool.

The Input
The input contains the client’s name, the date, a list of accounts, and the model portfolio assigned to each. I export a particular page with the account holdings from the Web site of my custodian, TradePMR, to Excel and paste it into my spreadsheet. I also export a list of every mutual fund, ETF, and individual stock in my practice from Morningstar’s Office Edition to Excel and paste it into the spreadsheet.

Let’s move on to the calculation section.

The Calculation
In the beginning, I would manually categorize each holding in each account, which was a painstakingly arduous process. I now use Excel’s VLookUp formula to look up the ticker symbol and retrieve the broad and subcategory for each holding.

Oh, I also incorporate the clients’ outside accounts such as their 401(k)s, etc.

If the key to growing a business is marketing, then the key to managing a business is being organized. I’ve been focusing more lately on becoming more organized. For example, when I meet with a client, I need to easily determine if there is anything I have not covered which needs to be discussed. Are they taking advantage of every available service? To help keep track of this, I have created a customized report in ACT. Then, when I meet with a client, I will print out this report, and bring it to the meeting. The report is divided into several sections including: contact info, goals, services, and family.

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As my business grows, I have come to recognize that I need an efficient way to “drip” or keep my name in front of clients as well as prospects. Although I write a monthly newsletter and e-mail it to clients and prospects alike, I find there is a need, at times, to send a more specialized or targeted message. In other words, I need to effectively convey my value proposition to the individual.

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