Not All Design Levers Are Equal
Design levers are so important. They can be pulled at just the right time to overcome financial shortfalls, allowing you to live your best life now. But, not all design levers are equal. Before I explain, let’s just recap why we need design levers in the first place.
Remember why we need design levers?
A few weeks ago, I did a blog on top down versus bottom up. Remember? It was about how a great Lifestyle Financial Planner helps their client define their ideal life and lifestyle from the top – their best possible version – and then works down to see what version they can achieve, given the resources available.
It’s the opposite approach to the way we instinctively think – most people work bottom up and focus on the bare essentials that they need to live, and add a few nice things (ad hoc) when they feel they can afford to.
The blog also talked about the enormous value that you add, as a planner – all those great things that sit between your client’s best possible version of their life and the way they would live if they were left to their own devices.
And you’ll remember we covered the importance of removing the fear for your client by saying, “What does your best life look like? Don’t worry about whether or not any of it might sound ridiculous, or whether you think you can’t afford it. Forget about that and just go for it. Think big – let’s have some fun!”
We then do some great cashflow modelling and discover that we don’t quite have enough to achieve absolutely everything on the list. So, all we do is notch things down a little. We make a few compromises. And we do this with design levers.
Some design levers are easier for your client to pull than others
If you were an accountant, and your client needed to notch things down a little, you’d probably just say, “you’re going to have to spend a bit less” or “save a bit more…” How dull! But luckily, you’re not an accountant – you’re a Lifestyle Financial Planner, and there are so many more options to play around with. Remember, your job is to help your client to achieve the very best version of their life. So, we make a few compromises.
But not all compromises are equal – some are easier for your client to consider and some are a little harder for them to get their head around. It’s the same with design levers – some are more acceptable to your client than others. So, we need to establish which ones your client is happy to pull now, and which ones they might be prepared to pull later.
The ‘if I coulds’….
Basically, what we’re saying to the client here is, “if we need to pull a lever to make all of this work, which one should we pull first?” And your client might say to you, “you know what? That classic sports car that I had my eye on – if letting that go means I can retire early, I can live without it.”
The classic sports car is a great example of an “if I could” – they’re lovely to have, and we want to help our clients to achieve them if we can, but if we can’t then the client is often content to let them go.
But there’s another great layer of design levers – the time-based ones.
Pull ‘time-based’ levers in the future to give your client freedom now
Time-based design levers are the ones that you may consider pulling in the future. They are a little different and a bit trickier for your client to get their head around. Why? Because it’s hard to project ahead, into the future. How do we know how we’ll feel about something in 20 years time? Will we feel differently? Will it still be as important to us as it is now?
But this is where you need to put the work in – you need to help your client to visualise how things could change in the future, because time-based levers are fantastic. It’s the time-based levers that can help to give your client freedom now.
Imagine asking your client if they’d be prepared to sell their home and rent instead. Most people at the age of 50 would probably say, “no, I can’t imagine doing that yet! Let’s not pull that lever!” They can’t even imagine selling their home in 5 years time, or even 10.
But ask them if they’d consider it in 30 years time, when they are 80 years old, and they start to see it as a possible option. And you’ll get a range of different answers, depending on the suggested timescale.
And that’s great! These are the best levers to pull. Why? Because in your cashflow modelling, you may have identified a shortfall around the time when your client is 80. But if you know you can pull a lever and tweak something to fix that shortfall in the future, (if you know your client might consider freeing up capital by selling their home and renting in 30 years time) then they don’t have to sacrifice anything now. They can focus on really living.
Time-based levers often feel like less of a sacrifice
There are a whole range of examples like this – perfect time-based levers that you can pull to address shortfalls in the future.
Would your client consider doing a different job that pays less? Probably not in 5 years, or 10, but maybe in 20 years they might want to change direction, take a pay cut and do the career they’ve always dreamed of. It wouldn’t work now, but they can get their head around the idea of it being an option for the future.
And that’s huge! It means they don’t have to sacrifice anything now, and are reassured that they have a lever they can pull in the future. And do you know what? There are probably multiple different time-based levers your client could choose from.
And do you know the best thing about this? If you document them all, when we start notching things down, it means we’re notching down the stuff that doesn’t really matter – it doesn’t impact on your client right now. They don’t feel restricted or stifled. They can live their best life. It’s fantastic!
The design lever conversation is a game-changer
It’s so important to take your client forward and help them to see that their lives, and the things they base their decisions on, will change in the future. So many things will be different in 20 or 30 years’ time – their minds, preferences, families, financial situation and pressures. Their decisions will be based on very different things.
They might think that they’d love a motorbike when they retire, but that could be 20 years away. Why put your lifestyle on hold now for something you think you might want in 20 years time? Think back to 20 years ago – do you still hanker after the same things now as you did then? Are the things that were important to you 20 years ago still as important to you now? It’s pretty unlikely. Maybe you turned your nose up at the idea of fishing when you were 32, but by the time you’re 68, you might love it! Things change.
Design levers are important, but don’t just pull any old lever – not all levers are equal. So have a great conversation with your client about which design levers they might be prepared to pull now and which ones they might be prepared to pull in the future.
Ready to knock your clients socks off?
Signing up to the Plan Happy Lifestyle Financial Planning Academy is easy.
You’ll get instant access to a sample of the course content so you can get a feel for it.
It lasts for 30 days and you can upgrade to the full package at any time.
So, click the button below, and let’s get started!