Common Sense Reporting

Do financial planners really expect people to read and understand their reports? If the answer is, “No” then the cover letter must communicate the complete thought. Think of the cover as the strategic communication.

Your recommendations will be tactical and connected to the strategies developed by the client and clarified in your work.

Here is an example of such a cover.

Thank you for providing us with the opportunity to review you affairs and to make recommendations.

The material attached is vast and completely dependent on the information provided and discovered and on assumptions outlined. There are no guarantees, just ideas about direction.

Multiple pages of dense number charts will put off almost anyone. While useless for purposes of communicating, the projection is necessary in order to generate our recommendations and to demonstrate how they make your objectives more readily achievable.

Try to think of the material as looking at the ground from an airplane. In the beginning of the flight, the ground is close and some details are clear and probably easy to understand. As the plane climbs, the details become less clear and the general ideas of what you are seeing is all that is possible. At cruising altitude, there is almost no detail and even the general nature of the terrain is fuzzy. Clouds or darkness may obscure the ground.

This is the way life unfolds. You cannot see the future with precision and it may not turn out exactly as you have assumed. You may adjust as you go.

All the while though, recognize that the plane has a destination and it has its own capabilities and careful pilots. The greatest risk to a financial plan is that the pilots, you, will become frightened or impatient. A long-view plan, such as this one, will help you to understand the possibilities and limits.

So far, you know your destination and the checkpoints along the way. Let’s review that.

Your destination in life, as I understand it, is to enjoy your life, to purchase the family business, to raise children, see them off into the world, retire while you are young enough to enjoy the time, have enough money to live as you choose, and to get out of debt as soon as possible, given the earlier purposes.

Your vehicle for success is your ability to earn income and the discipline to be frugal.

With the projection, we have tried to simulate the flight. That has several purposes.

  1. To identify risks that may exist and to avoid them where possible
  2. To identify opportunities
  3. To examine the effects of choosing other options.
  4. To reassure you that your plans and methods can achieve the goals that you want, or to recommend changes if it appears they cannot.

We discovered eight specific things that will matter. (Listed in the original)

Some people find a visual representation of numbers to be more useful than wading through the 104 pages attached. You will find two graphics that may be more useful in achieving an overview.

Graphic one is a line graph that shows your available unallocated cash flow each year. Years 5 to 12 will be a challenge for you, not because the outcome is unreasonable, but because your nature is not to spend more than you bring in. You will need to come to grips with this and understand that not reducing debt is a reasonable condition. Your priority in these years, raising young children while maintaining your chosen lifestyle, is more urgent.

Graphic two shows your net worth in terms of your home, (net of debt) and your financial assets. Financial assets include RRSPS, TFSAS, RESPS, bank accounts and investments. As you can see, financial asset growth does not occur for a while. Again, it is reasonable.

There are nine recommendations attached. We will discuss these in more detail when we meet on the 29th.

If these people can work through the recommendations, the graphs and the cover letter, (5 pages) they can make reasonable decisions. Advisers cannot make good recommendations without the massive overview, but clients lack the tools to use it and don’t need that level of precision. It is there if they want to look, but few do so.

Be kind. Summarize and support.


Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.