Episodic Wealth Management isn’t the name of a new made-for-TV series, and it isn’t a fad for those looking for differentiation. Episodic Wealth Management is the result of a large time investment, whereby the planning firm commits to know everything about a family: their balance sheet, cash flow, preferences, relatives, business matters, legal documents. I mean everything.
The core of EWM is that stuff doesn’t just happen to your clients between 9 a.m. and 5 p.m., Monday through Friday. Stuff happens 24/7, and a solid planning team must be ready to spring into action as the need arises. This may be nights, weekends, even holidays. If that is already too much for you, we don’t think alike and your time may be better spent doing something else right now.
Before your firm can deliver EWM, your clients must view you as their primary resource for financial information. This doesn’t happen overnight and it may take time to develop that type of trust. Clients have to know that you care, and that you are ready to be there to assist when needed.
Unfortunately many CPA financial planners believe it is necessary to prove to the clients how smart they are. They talk about education, credentials and anything to up their IQ in the eyes of the clients. This will never build the level of trust needed. It was told to me years ago, and now I’ve lived it since my days in public accounting: Clients aren’t going to remember your education and vast experience as much as they’ll remember how you make them feel. Clients don’t care how much you know as much as they care about how much you care for them. Your actions and work product demonstrate how much you care more than anything else.
Table stakes for EWM
To become an effective EWM firm, you may need to change or add a few things. The first requirement is a robust financial planning process, one that is robust enough to keep your data current, even contemporaneously with daily fluctuations. You should be able to access that planning system from anywhere. Gone are the days where this material lived on a hard drive in the office where you needed to be there or use a VPN to get in. Cloud-based systems are plentiful, and you should upgrade now if you’re not there already.
Next, you need to make sure that all of your clients’ information is properly loaded into the system. Many planning firms input just enough data to answer the clients’ questions at the time the planning engagement starts. To deliver on the EWM promise, you need to be sure that every little detail regarding your clients’ lives is documented. This would include all of the financial information along with family information, legal documents, insurance policies, names of other professionals on the advisory team and anything else significant.
You must demonstrate a proactive approach to client service. Accountants, much like attorneys, frequently aren’t too proactive. Sitting back and waiting for your clients to ask you the right questions is not helpful when delivering EWM. The progressive firm will develop a system so that needs are recognized in advance of the actual time they arise.
A simple example of that is with your clients’ insurance policies. It is very easy for you to input into your system that a client’s policies for home, auto and liability expire on a certain date. You can build trust by asking the client for an introduction to their property and casualty agent so that you can get information about their renewals without having to chase down the new policies or declaration pages. This is more critical than you think thanks to mainstream media. Many agents even believe that now it is their job to save a client 15% in 15 minutes … and they can do that by cutting back on benefits. That’s exactly what high-net-worth clients don’t want! Examining the new policies when they are issued will reveal if any such tricks have occurred and may prevent a future problem.
Use this same approach with your clients’ life and disability insurance. When premiums are due, circle back with the client a month in advance to let them know you are on top of it, and whether their policies are still on track to deliver as they were sold. This is very important in the case of some life insurance policies where there are many moving parts. An in-force illustration should help to give you a deeper glimpse into the health of that policy. Make sure that you speak with the agent to understand the assumptions used in the in-force illustration. A sales-dog type of agent will slant the illustration assumptions to make sure it looks good … like using a ridiculously high rate of return on a variable universal life policy. I’ve seen agents use a 12% earnings rate when the underlying portfolio is balanced with equities and bonds … a likely unrealistic return for that type of allocation.
This trust is confirmed when you use the data and knowledge that you have to proactively help with anything.
Another example is filing an application for Medicare. We all know this is best done 90 days before your client’s 65th birthday. Why wait for them to call and ask about it when you can advise them ahead of time and even set the appointment to walk them through the process?
Clients care a lot about their family. When is the last time that you spoke to a client whose child just turned 18 to advise them that the child should have a health care power of attorney and or a HIPAA waiver so you can be privy to all of their health care needs? This becomes even more important if their children live out of state while in college or a boarding school.
This same proactive level of service is required across all subject matters to build the level of trust needed for you to be your clients’ primary advisor. This level of proactivity should be delivered in all areas of service: with their estate plan, their business partnership documents, their business valuations or a review of related-party leases. Once they feel that you are so good at making sure that nothing falls through the cracks, you are in a position to deliver EWM.
Stay in constant touch
To make sure that they know you are ready for them at any time for any issue, tell them. This should be prominently noted on your website and in your conversations about the level of service that you offer. When do you think the last time their broker told them to call anytime about anything and meant it?
Your cell phone number needs to be in your email signature, on your business cards and you need to have it available. Of course, there could be some times that you designate as out of bounds. For me, I let clients know that if they call after 10 p.m. that they won’t get me; I’ll be sleeping! But beyond you, they should also have contact points for anyone on the client service team.
EWM comes in very handy when your clients have a lot going on. The past few winters, as many of our clients in the Northeast have gone south to thaw out, stuff happened. Some wanted to upgrade their homes in Florida, others wanted to buy new ones and others wanted to buy a car. Sometimes the questions are as simple as, “Should we buy or lease the car?” But many times the issues were deeper, such as using cash versus getting a mortgage, how to take title to the real estate and how much they could actually afford. In the latter case, it was as easy as logging into the planning system and running the numbers for them in real time, as opposed to saying that we’d get back to them. Within a matter of minutes, they understood how much they could spend and the consequences of an all-cash deal versus purchasing with a mortgage, with a PDF waiting for them in their email inbox.
More significant is the issue of domicile. Many now want Florida (or any other tax-free state) residency status for tax purposes in addition to simply avoiding snow. If you have a client who is in Florida all winter, ask if they’ve considered changing their domicile to Florida. Then be ready to walk through the lengthy list of matters to consider when making such a change.
If your wealth management practice still lives by rigid standards of how often you’ll meet with clients and how often you intend to call or reach out, it is time to change that up. Especially in this day and age of Zoom rather than in-person meetings, you need to express your care for clients in ways that may exceed their expectations in our prior world. It is only when you consistently exceed client expectations and proactively seek out issues for them to consider that they haven’t even thought about that you will be their go-to person, delivering Episodic Wealth Management.
