by Mark Snodgrass on July 17, 2018

Financial Information Categories - A Communication Perspective

Communicating effectively with clients about the finer details of their finances can be a difficult task. Not only can it be difficult to get clients to feel comfortable sharing the personal details of their financial information, but the amount of information needed to create the best plan can make it easy to miss some important parts of a financial plan. 


In the article below, Money Tree Software president Mark Snodgrass provides his insights on various categories of financial information to help organize the information and determine what is important for a client's financial plan. 

Facts, Estimates, Objectives, Assumptions and Parameters

By Mark Snodgrass

Financial Information Categories  –  A Communication Perspective

Modern financial planning processes rely upon the accuracy and appropriateness of a very particular set of financial information. The various kinds of facts, figures, and details that go into planning projections play different roles and affect resulting outcomes in distinct ways.  Advisors working with clients, in person or via Client Access Portals, have opportunities to help educate clients on the meaning and importance of different kinds of variables that drive financial planning illustrations and projection results. 

Clients intuitively understand that information they share with advisors regarding income and assets are generally facts; objective and verifiable numbers that will form the foundation of planning projections. The completeness and accuracy of these values are a clearly understood requirement that can be fulfilled with paystubs, tax returns, and brokerage statements. 

These selfsame clients however, may not really understand or appreciate that the accuracy of their responses to questions on how much they spend, or how much they save, will have a major and significant impact on calculations. These softer client numbers are often really estimates or ‘opinions’ or ‘intentions’, rather than facts. While spending and saving history can sometimes be documented, it’s worthwhile to discuss with clients how the planning process relies heavily on accurately describing probable future behavior.

Other major plan details, such as retirement ages or retirement spending levels, are critical values for building a financial plan. These are really objectives for clients: life targets that describe what clients hope can happen in the future. These objectives may be discussed and developed in conversations between clients and advisors, or clients may have strong opinions of their own about when they would like to retire, and how much they believe they will need to spend.  Either way, advisors can help clients understand the potential balance between these objectives and overall plan success. Objectives may or may not be achievable, given other constraints, concerns, and considerations of individual clients’ actual financial situation.

Planning assumptions describe the outward environmental influences planning systems use to build and evaluate the financial model of clients’ future. Some assumptions are specific to clients, such as potential rates of return that are logically connected to clients investing style and risk profiles. Other assumptions, such as taxes and inflation, are general to the national or global economy during the planning period. It is prudent to regularly remind clients that assumptions are just estimates, and are placeholders for unknown future events.

Finally, parameters are fixed limit entries that establish beginnings or endings. Pensions and social security starting ages, education starting ages, and life expectancies may be set by rule, statistics, or preference. Pensions may not be available until a prescribed age. Social security has entire books on choosing starting ages. Life expectancy is a complex choice, as average life expectancy statistics, family history, and planning certitude can all play a part in selecting this assumption’s value.

There are many, many numbers in a fully formed financial plan. Clients can become bewildered by their meaning. Differentiating between the various kinds of values in the planning process may help communicate the importance of the information clients bring to the table, and more accurately describe and explain to clients the reasons and purposes of specific values as they are selected for the planning process.


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Mark Snodgrass

Mark Snodgrass, President of Money Tree Software, has been working with advisors to develop professional financial planning models and reports for over twenty-five years. Please address correspondence or questions regarding this article to or to Mark Snodgrass, Money Tree Software, 2430 NW Professional Dr., Corvallis, OR 97330