by Peggy J. Rouillier
Visually organizing information is not a new concept, but one that is emerging as an important tool in successful financial planning. Mind mapping harnesses the power of visual thinking to present information and connect ideas. This can not only save time and increase clients’ understanding of their financial situations but give financial planners the higher level of crucial thinking and innovative solutions required to help clients work toward their financial goals.
Mind mapping helps organize individual elements into a big picture. A mind map is a picture or diagram that places an idea, task or goal in the center and then expands outward by connecting thoughts and next steps to it.
Maps deliver a bird’s-eye view of finances that can then be broken down into simple processes, tasks, next steps and details for follow-up. Given the complex nature of financial planning—from establishing personal goals to ever-changing tax regulations—mind mapping is a proven tool for addressing all aspects of the planning process.
The illustration below shows how mind mapping tools marry the practice of financial planning with visualization. The map shows the big picture and the simple next steps together. Maps can also feature behind-the-scenes activities and who is involved at each phase.
How It Works
I begin mind mapping using a wealth management consultative process discovery map created in Mindjet’s MindManager software. The client is placed in the middle of the map. The client’s financial life is divided into four categories: charitable giving, wealth protection, wealth enhancement and wealth transfer. Each item is assigned various actions. Color shading enables the client to see past, present and future actions at a glance.
One simple area where maps have an impact is helping clients understand their asset registration. Often, the taxation of an asset—taxable, tax deferred and tax avoided—discloses its registration. Clients can easily see the tax implications of each asset.
A color chart of assets by registration helps clients understand how their money is moving between categories. Nearly every life event requires money in motion. For example, green represents nonqualified assets or after-tax principal assets such as CDs and stocks. Yellow represents qualified assets or before-tax principal and tax-deferred earnings. Orange shows real estate holdings.
Visualization using color is a powerful way to show clients the movement of money. For example, if a client purchases a new car or home for cash, green income-producing assets are exchanged for red, non-income-producing or dead assets. The result is a decrease of income and cash that can easily be seen on a map.
As clients accumulate retirement funds, green assets are reduced but yellow money assets are increased. As the client moves into the retirement distribution phase, yellow money is reduced as taxes are paid to the IRS. There is no increase in green money because it is spent as disposable income.
Following the death of a family member, money becomes an inheritance. By shading the asset, you can follow the money through the probate process, a particularly useful visualization if the estate plan is complicated.
An asset classification map helps clients make better decisions about the vehicles, time horizons and suitability of their financial planner’s recommendation. Color shading helps track where the money is at any point in time.
Simplify Complex Situations
The more complex a financial situation, the more useful a mind map can be. For example, a small-business owner in bad health needed a transition plan. She was afraid she would not survive her asset liquidation in time to prepare a financial portfolio for her favorite charities and friends. Mind mapping her assets helped her outline a plan for converting the dead or used company assets into cash, an income-producing asset. The owner specified who had authority to execute her strategy. Although she passed away during the liquidation process, her assets eventually reached the prespecified destinations in the mind map.
Facilitate Communication
I use a team-of-advisers map to facilitate communications. I include contact information for a client’s key advisers—bankers, lawyers, accountants, insurance agents and others. This map encourages clients to think of their advisers as a team with the financial planner as relationship manager.
With proper authority, the team can communicate on the client’s behalf. As a private wealth adviser, I share client maps with attorneys and accountants to clearly outline the client’s specific intentions. When we are all on the same map, we can more efficiently discuss issues and assign responsibilities.
Mind maps help communicate complex issues, considerations and goals that overlap among us. This makes the planning process more efficient, reduces errors and builds trust as clients see the team working together toward their goals. Mind mapping technology helps streamline this communication process.
Mind mapping for financial planning helps in other areas, too:
Enhanced analysis. I capture ideas by brainstorming them onto a map, then attach relevant documentation. Visually rich maps, complete with graphics and color coding, illustrate the relationships between important issues. This helps clients understand relationships among assets they may not have considered.
Better decisions. By visualizing projects and clearly showing process workflows, I can prioritize activities and facilitate decision making. Numbers, icons and shades assign resources and track progress toward task completion. Maps can be filtered to prominently show important information and downplay minor data. Current investment portfolio statements, legal documents and insurance information can be imported. Relationships can be shown with arrows and issues highlighted with flags.
Increased productivity. I can print or e-mail maps to clients or import them into a PowerPoint presentation. Everyone can easily see the status of activities and track his or her responsibilities.
By monitoring and tracking the details of my clients’ financial journeys through mind mapping software, I am able to help clients organize their financial information. My clients can spend more time enjoying their lives and less time worrying about the future. Clients can track their progress toward specific goals.
Crafting a mind map tells a client’s unique story by presenting complex information clearly. This, in turn, can help stimulate innovative solutions by the team of advisers while clarifying responsibilities and goals along the way.
