by Randy Fox, CFP®, AEP®, Two Hawks Consulting
Develop and execute a good plan for implementation.
It’s so easy to forget that a good plan is only effective if it is fully implemented in the way it was designed. Many advisors design good plans that should lead clients closer to their stated goals. Many advisors make good recommendations, offer good strategies and tactics, know what investments to suggest or how to build an asset allocation that suits the risk profile of the client. Many also fall way short of the follow through on the rest of the planning for any number of reasons: perhaps they don’t make money from anything other than managing money so there is no incentive to make sure that other items are completed; perhaps they lack the resources or referral outlets to feel confidence in getting the rest of the plan completed; perhaps they just don’t care (I hope not).
Implementation can be a challenge. Full of details and follow through items that require reliable outsources who can get things right the first time. It can be frustrating and time intensive. Left to their own devices, your client will get it wrong. Every time. If you have a challenge getting the professionals to do it right, imagine the challenge of having your client trying to communicate to someone what needs to happen next. You need to lead and continue to lead to get your client all the way through every step, every phase of every recommendation.
Here’s an example of a client matter I’ve been involved with for more than a year.
Client and his spouse engaged for a comprehensive wealth design. With an estate in excess of thirty-five million dollars, there were several solutions proposed and agreed to all of which needed execution and oversight.
First step was a pension rescue which required life insurance, underwriting, establishment of a new qualified plan, fund transfers, premium payments, calculations and finally tax reporting. A failure to complete each or any of these steps would have meant unintended results for the clients. There were four or five professionals involved in the completion of this one phase of the planning, all being directed and supervised, not by the client but by the advisor.
Second step was the gift of intangible personal property (Goodwill) to a pooled income fund. Attorney engaged to draft the transfer of property, gift application, gift receipt and income agreement prepared, transfer completed. Appraiser to hire to value the non-cash asset. Client hires his own appraiser who refuse to sign form 8283 so we start over. Tax filing deadline missed so amended return will be needed. New appraiser engaged (advisor’s original recommendation).
Second gift in 2019 to the same pooled income fund. Need basis and purchase dates from ten years ago. Two financial advisors to handle this while the gift receipt must be prepared by the charity. Follow up is a constant necessity.
We still need to have basic documents reviewed and re-stated. We still need to form a new limited liability company and set up an intentionally defective trust and select assets to transfer to the LLC and sell to the defective trust. We need seed gifts and a gift tax return and another appraisal. We need a note and a security agreement. This process could start in 2019 but will certainly carry over into 2020.
These clients are already in their mid-70s and starting to show signs of aging. Their pension rescue needs regular monitoring. We need to stay aware of changes in health. We need trusts completed and funded. We need time to pass.
Implementation is the plan. Design itself is meaningless.
The best plan, unimplemented, is worthless.