Advocacy Process: Personal Planning and Strategic Roadmap
March 31, 2021
Join Matthew Kerzner, a director in the Center for Individual and Organizational Performance, and Marc Scudillo, managing director in EisnerAmper Wealth Management Corporate Benefits, as they discuss Advocacy Planning and how it intertwines with the Strategic Roadmap Process.
Business owners have complexity in their lives in having to plan both for the success of their business as well as the success of their personal planning. The planning for the business and for the personal wealth are so inter-connected that they cannot be done properly if done in isolation. There are tremendous benefits to learning more how the Advocacy Process™ and the Strategic Roadmap can help ensure the business and your personal wealth is on tack towards creating purposeful success by design.
MK: Excellent. Excellent. Today we're going to be talking about Marc's advocacy planning and my strategic roadmap activity, and how we mirror that and partner together to really help our clients with some of the burning questions that they ask. And they're seeking some guidance.
So some of the questions that we have heard, Marc, that you and I have heard, I'm just going to state some of them. And then I would really love to hear from you about how we start addressing them. So some of the questions that we hear all the time.
- Can I afford to exit my business?
- Can I leave today and live the lifestyle that I want or currently enjoy?
- How do I plan accordingly?
- Do I stay on if a private equity firm wants to purchase us and wants to keep us on?
- What will I do if I don't work here anymore?
- How will I decide who will take over the business if we decide to stay?
- And how do I compare myself to others so I could actually have a plan that's going to work for myself, my family, and my employees?
So these are questions that we hear all the time from prospective clients or from other advisors that would reach out to myself, or someone like Marc, to help them start planning. So, Marc, I actually want to start. What's the first steps that you take when you start hearing some of these questions?
MS: Sure, Matt. And those are questions we hear on a consistent basis. And we wrap them all up into a concept that we just want to make sure that our clients are going to be okay, okay based upon what's most important to them on their terms.
So sometimes the client doesn't even know what is the concerns that they should have. So, we help guide them and work through together, and the synergies that we have within our practices, Matt, that you and I have seen working with clients. A lot of this has some numbers and finances associated with it, but it also has the behaviors and the emotional side that's tied to the equation here. And you have to sift through both of those.
And so right in the beginning, through our advocacy process of really helping our clients understand the first step, before we do anything, is discovery. Right? We have this discovery process that's really getting into the understanding and the concepts and the emotions of what's most important to the client before we even get into the numbers. And we do that through something we call "our honest conversations." And we even get into it a little bit deeper and how they make their financial decisions through a money-mind exercise, which really drills down into what's their bias when it comes to their financial decisions, whether it's protection and they have a fear of running out of money or if they have a fear of the unknown. Or is it really that their drive in making financial decisions is based upon the happiness that they get in spending their money or the commitment they have towards charities or towards other family members? These are all important decisions that get into how are they going to be okay, and address all those questions that you just asked.
MK: Yeah, that's excellent. So after you go through your steps, go a little deeper into your discovery process.
MS: So you're right. The discovery process itself, it starts laying out the foundation of what's most important. But then you have to match the numbers to those words that a client is telling us of what's most important to them. And so drilling down deep and saying, "Well are you going to be okay? Is the business going to be okay based upon what the variables are on the potential sale of a business, for example, is that going to be sufficient enough to match your lifestyle needs on a going-forward basis?"
We actually utilize a planning process as part of the advocacy called The Wealth Confidence Report. How confident are we going to be able to be to live your lifestyle in all market situations, on a going-forward basis, to accomplish all those goals that are most important to you along the way, both for you and your family, as well as the importance of what you want to have happen for your employees? So that's all part of The Wealth Confidence Report.
MK: Excellent. So now, Marc, tell us a little bit about how you would go through your process and bring someone in like myself, a business psychologist, to really help our clients.
MS:Sure. It goes beyond the psychology because you're laying the foundation for that business owner of understanding what's most important for them to drive their business. So let's think about this from the beginning.
So we had a client that said, "We're thinking about getting out of business, but I don't know what that means and if I can do that." And so by going through the advocacy process, we're able to see if they have the opportunity, if the business is going to have sufficient amount of value for them to sustain their lifestyle the way that they want on a going-forward basis. And for this particular client that we had, we were actually able to help them see that. Well maybe we're not at the point in time right now to sell the business, to be fully independent of having to work as the initial desire came to us as. But you were able to, through the strategic roadmap, help them understand and see, "Well maybe the value isn't that you want to completely get out of the business. But what you're doing is you're wearing so many hats as a business owner, is that it's eating up and occupying all of your time so you never feel like you're in the moment. You're not present to enjoy life along the way. And that's what's eating at you." So maybe how do we balance now between work, and being present along the way, and start adding the opportunities of saying, "Let's use some of the resources, infrastructure, that you actually have at your fingertips in a little bit different way.
Opens their minds, the way you walked through that strategic roadmap. And we're able to show how they could be saving money along the way so that they can build their diversification outside of the business. So the business doesn't have to sell for as much at a certain period of time because they now have diversification from the business. They also have a business that can help run more of itself so that, this particular client, they were able to take a month off to go away to Italy. How exciting was that for them? And this was pre-COVID, so everybody knows, but they were able to enjoy that timeframe that they had to be able to go and do it with a frame of mind that they know that they were going to be okay, okay for their employees, and okay when they come back.
Very exciting for us to walk through that process and see that success for that client.
MK: Yeah. I want to add a little bit to that. Because the beautiful thing about doing a strategic roadmap with you, Marc, and working with your clients through this process, is you're gathering all the important data through this advocacy planning process, in the steps that you do and the tools that you use. And that's really that discovery process where all this data is what they need to live currently, and in the future, that's going to help them make some decisions. And then they are going to say, "Okay, this is the value that I can get from my business." So then there's some decision-making that needs to happen. And if all the answers point, "Yes, I can sell. I can go through that liquidity event." Because it meets not only physically what I need to live for the rest of my life, but also to give to the next generation, or to be able to have some other plans for what I call "philanthropy," right? That live, leave, and give formula.
But if the numbers don't match, then we start doing some creative thinking about what do they need to do to get the business ready and how long that might take, or do they want to hold onto the business, like you just mentioned, where they could take some of their current employees or hire some employees that could take over some of the management, so they can continue to enjoy their business and the income that comes from the business, without letting go of that legacy that they currently own. Does that make sense, Marc?
Marc Scudillo: Absolutely. That's what we call the lifestyle-type business. And by walking through each of the steps, we try to determine, through the wealth confidence report, what's the value gap that needs to be made up by the business so that they can live that life of independence at some point in time. And how we're going to achieve that, whether it be through the growth of the business and/or accumulating additional assets.
Additionally we look at, through our protectionist state solution, that particular step is addressing what you're saying is, "How are we going to leave the assets in a maximum efficiency to charity or to heirs? How do we also make sure that our balance sheet and income statement is protected along the way?" Because there is risk that's associated with owning a business and having a large amount of assets. And then take it a step further, there's also risk of having a concentrated position on your balance sheet and that concentrated position is your business. So through our Investment and Portfolio Optimizer step, we're saying, "How are we going to maximize the diversification around your business at a point where you're comfortable?" Knowing that where you have the levers that you can control within the business, diversification outside of the business still give them the freedom and flexibility to say, "I can now be independent and stop working and not depend upon a paycheck, just purely from my business."
MK: Outstanding. When I'm doing the strategic roadmap activity, how this relates is after they have all the data of what their current life is and what that looks like in the future for them, I get into, "What does the business look like?" Current business development. Can you stay with the business development? Or do you need to shift a little bit based on some of the data that's been provided back to the client, based on the information that they worked with you, Marc, on.
We could also look at, do they need to do some operational efficiency? Do they need to make some investments in their business that's going to help them maybe run the business remotely for a while? Right? So that couple that you mentioned, that's going to go away to Italy for a month to six weeks, can they literally look at the business through a dashboard, right, on the beach or traveling, just so they can keep a pulse check of what's going on?
And then I get into people development. Right? Do they have the bench strength to actually take the current workforce and give new roles and responsibilities to them? Or are there any gaps that they need to now look at, bringing external people in to help them run the business for that period of time? Right?
So we do those things. And then after we have this wonderful dialogue, then I would partner up with Marc and the clients to do action planning and look at the goals that they want. And I do it in a smart way, specific, measurable, achievable, relevant. And we put a timeframe on it, and we help them understand how to hold themselves accountable to actually work this plan. Once they have all the data and their decisions now have been made either one way or the other, they now have a nice plan that they can follow to really help them live the dreams that they've created.
So, Marc, any other thoughts on the advocacy planning or the partnership that we have?
MS:The beauty of the synergy between our practices and really working together, it really allows us to get in deep as to, "How do you build the business to the point of what the client defines as success?" So we call that purposeful success by design. And so that is the nature of what we do collectively together. Because now we're designing not only the business, which we feel you can't do business planning without having the proper personal planning in place, and you can't do personal planning for a business owner without looking at their largest asset and maximizing the value of their largest asset, which is the business. And so the synergy between the two just makes perfect sense, and our services continue to be intertwined with one another to add value back to the client.
MK: Excellent. Well, Marc, thank you so much for taking the time out and being part of our podcast series. It was a pleasure to talk to you today.
Marc Scudillo: Thank you very much, Matt. I appreciate it.
MK: We have plenty on our website, so please visit eisneramper.com/CIOP for more information.