I’m a financial planner and the idea behind fpPathfinder began, in part, out of my own need to stay on top of certain financial planning issues. My first flowchart was developed so I could provide the correct answers to my clients’ questions quickly and reliably.
Years ago, when I was first getting started in the business, there was a span of time where it seemed like every client came to me with the same question: “Can I contribute to my Traditional IRA or Roth IRA?” Over and over, the same question was presented to me but in each case, the reason for the answer was completely different. One client was too old to contribute to his Traditional IRA, one earned too much, one had already made a contribution to her Roth IRA, one client had income (but it wasn’t earned income) and it went on from there. I found myself tripping up on the rules or confusing the Roth IRA rules with the Traditional IRA rules.
I realized that this simple question was having a material impact on what I was doing:
- The confusion on my part became a distraction. Many times, the question was asked as an aside to a broader conversation about retirement. Having to think through all the issues and contribution limits that applied to that client would get us off track from the main conversation.
- On phone calls, I found myself realizing I didn’t ask enough probing questions after hanging up. In these cases, I was simply caught off guard by the phone call and the question. But it resulted in me having to call the client back to clarify a few points, which is not a great way to provide advice.
Ultimately, I could see that providing advice needed to be done in a smoother more structured process. Fumbling for the right questions to ask does not give the client the confidence that I am the one with the answers. If I’m not sure of the right questions to ask, how should it be expected that I would suddenly have all the right answers? I knew that I was lacking some kind of structure, but I wasn’t sure what the solution should be.
Then out of pure frustration, I started to sketch out various decision points to answer the question about IRA / Roth IRA contribution (and deductibility) rules. A framework was designed to guide my thinking and to serve as a guide for client conversations. As the string of decisions came together, it took the form of a flowchart.
This simple tool saved me hours of clarification with clients. It saved me the mental energy I used to spend trying to think of all the issues off the top of my head while I was meeting with the client or on the phone. Best of all, clients were getting clearer advice from me.
Around the same time, Michael Kitces wrote a post on Nerds Eye View, “Why Aren’t Checklists A Financial Planning Standard?” It was inspired by his reading of Atul Gawande’s “Checklist Manifesto”. In the post, Michael argued that the financial planning profession needed checklists to help ensure planners did not miss a planning opportunity or accidentally make a mistake.
Michael wrote that the opportunity for checklists could be especially beneficial in dealing with situations that may be “frequent enough to matter, but not frequent enough to necessarily remember to ask every time.” That post spurred a wave of interest from planners looking for planning checklists. Except, very few checklists existed at the time. Michael realized that there was a need for simple tools to help planners identify planning opportunities and ensure that careless errors were not being made at the expense of a client.
Separately, we arrived at two different tools to help planners provide better advice to their clients. Interestingly, checklists and flowcharts share a few common traits. Both checklists and flowcharts were integral in creating simple, but highly effective quality control systems in Japan after World War II. They were part of the Seven Basic Tools of Quality Control. This is covered in more detail in the white paper.
Ultimately, fpPathfinder came about because two planners saw the need for simple tools to provide a framework for solving complex problems related to financial planning. In 2017, we decided to bring the two ideas together and develop them under a single business.
Now we hope that the planning community will be as excited about these simple tools as we are.
I’d love to hear from you. Do you think this will be helpful? How do you envision using checklists and flowcharts in your business? Please drop me a line with any thoughts or ideas you may have: email@example.com