When builder George P phoned to ask how we work with clients, it became clear he would rather repair a roof in a snowstorm than meet with me. However, his accountant insisted.
I tried to answer him in kind. I said, “We work the same way you do. First, I meet with people to see if they know what they want and whether I think I can work with them. If they don’t want the impossible – a 6,000 square foot house for $300,000 or a retirement account with a guaranteed 12% tax-free return – I agree to advise them.”
He asked, “If not, you’d walk away?”
I answered, “Yes; unless they will come down to reality, yes.” I added, “However, today we often have to educate people to understand what is possible, probable, and achievable. Too many young people today have no experience or knowledge when it comes to prioritizing their allocations – of time and energy as well as cash.
“Just as you might approach a building,” I continued, “we start with a set of expectations and wants, followed by a thorough analysis of what we have to work with. We observe current practices and draw up a plan – a blueprint. We then discuss that blueprint to validate its conclusions. Sometimes assumptions taken as fact prove not to be so. Next, we revise the plans to make sure they are doable and what the owners want.
“Then, it is time to begin construction. As with a building, we begin with the foundation before the upper floors, making sure their financial foundation -- emergency funds, loss prevention, income protection and their support systems -- is solidly in place first.
“After that, rooms and floors dealing with first, present needs, then intermediate, and long-term needs and wants are built. Of course, that extra child’s room that could also be an open space may not be agreed upon until the very last minute.
“A whole “floor” may be dedicated to laying out retirement plans and the disposition of the business. It is sure to include several flexible partitions that will be finally nailed down at a later date.
“Also, as the builder, you bring in specialists when it comes to wiring, heating, plumbing, etc. So, of course, I work with skilled professionals to handle such details: an estate attorney, tax professional, insurance pro, investment pro, etc.”
“So, you let the other pros take over from the plans?” he asked.
“No,” I replied. “Just as you do when you are the General Contractor, I coordinate integration of these professionals into the process. An estate lawyer can do nothing without a breakdown of ownership and titling, let alone values and desires -- just as you would not pull wiring ahead of plumbing or behind dry-wallers. Also, a recommendation by one pro may lead to rethinking certain solutions such as when poor health limits life insurance, different investment strategies will be required. Your situation might be new code requirements for heavier joists, affecting overall cost.”
“What if I don’t like what you recommend?” he asked.
“You are under no obligation to proceed,” I answered. “You can always get a second opinion or we can consider alternatives. It is YOUR plan, not mine. But the time to object is before we begin construction / implementation.”
George P was an exacting builder and an equally demanding client. His retirement to become a full-time Florida fisherman was all he had hoped it would be.
Construction has a certain logical progression; so does financial planning. They both require continued maintenance. The difference is that financial plans are subject to unexpected change due to outside events such as new tax laws, business opportunities or to changes in family situations such as divorce or inheritance or dependence. Family and Business Financial Plans need much more tending than mere paint and pest control.
In short, periodic review and revision are necessary to keep your plan current. Also, staying on track to exit a business and retire is sure to require periodic actions.
We would rather teach you how to fish than to simply hand you a fish dinner. Education, properly applied, can alert you to protecting your construction even while it is still a ‘work in progress.’
If what you know to be true about finance turns out NOT to be true, how soon would you want to know?
Originally published in the April 2019 Morning Star Business Report