BOOT CAMP. FPA Pro Bono Boot Camp. How to successfully provide pro bono financial advice in your community!

Transcription

1 FPA Pro Bono Boot Camp How to successfully provide pro bono financial advice advice in your community! Copyright Financial Planning Association. 1 Why Pro Bono? Help people and make a difference in your community Advance our profession Increase FPA s visibility as a resource in the community Strengthen ties within your chapter It just feels good! 2 1

2 Who is Eligible? Pro Bono is free financial planning for: f l f Underserved & low income individuals/families who cannot afford to engage a financial planner Nonprofit organizations that serve underserved populations Others in need as determined by chapters. 3 What is Pro Bono? Pro Bono is a form of community service f No expectation of remuneration or client development Clients must meet qualifications 4 2

3 Pro Bono Activities Group workshops/presentations kh One on one consultations Mini Plan A mini plan is the financial planning process minus implementation and monitoring Data gathering & goal setting Data review & clarification Plan presentation (including financial statements, risk assessment and tax implications) 5 The Ground Rules 6 3

4 The Ground Rules No sales or promotion. Representing FPA, not your own practice or your firm. Advice only no implementation or monitoring. Track and report your activities and report activities use the Letter of Engagement or Sign up Sheet 7 Additional Ground Rules Work with your FPA Chapter h Record Results and Outcomes 8 4

5 Volunteer Eligibility Policy To ensure consistency of representation, information and procedures ensureconsistency of representation, information andprocedures for pro bono financial planning efforts, FPA s policy on pro bono volunteer eligibility is as follows: To serve as a volunteer in FPA s pro bono financial planning program, individuals must: Be an FPA member in good standing who is a financial planning practitioner Abide by the FPA Code of Ethics and agree to uphold FPAby of agree to FPA s s Standard of Care, requiring them to place their clients interests first. Complete FPA s Pro Bono Boot Camp training session Sign the pro bono letter of engagement that states he/she will take responsibility for services provided in the engagement 9 Volunteer Eligibility Policy Any FPA member who is a financial planning practitioner may participate in pro bono programs, regardless of designation or lack thereof. These individuals are welcome to provide services such as one on one counseling and group presentations to clients. A lead financial planner will be designated as the person responsible for the engagement with the pro bono client but may delegate tasks to others, including allied professionals, dl t t th l di lli d i l paraplanners, CFP candidates, etc. All those involved in a pro bono engagement on behalf of FPA must adhere to FPA s pro bono procedures and guidelines. 10 5

6 Financial Planners What you do matters! 11 Regulations and Compliance CFP Code of Conduct applies to pro bono of Conduct to pro engagements conducted by CFP certificants Compliance Your firm s compliance process applies Don t give advice on topics for which you are not qualified Most topics will be basic, e.g., budgeting 12 6

7 Liability The best protection is good practices Check your E&O insurance Follow the FPA Pro Bono Guidelines No recommendations of specific products No implementation Use the Pro Bono Letter of Engagement gg Use your own letter if desired or needed Federal Volunteer Protection Act of Value of Financial Planning 14 7

8 Client Engagement Process 1. Client referred from partner 2. Determine what is needed 3. Sign client engagement letter estimate the number of meetings & time needed; note client questions & scope of engagement. 4. Advise Client: Tools: Worksheets, Guides, Actions steps after each consultation 5. Feedback to Chapter Pro Bono Director 6. Close: Complete last page of letter with actual hours and final notes and scope. Send a copy of the letter to the Director and/or chapter designee 15 Pro Bono Engagement Letter 16 8

9 Pro Bono Engagement Limited, not ongoing Empower clients help themselves hl th l Involves basic financial coaching: goal setting, data gathering, budgeting, debt management. Formulate a plan or action steps. Pro Bono Engagement = Client Agreement 17 Available Resources finplan.org Updates on activities and resources Pro Bono Guidebook ProBono Pro Bono Toolkit Pro Bono Community of Interest Third party sources (FDIC, NEFE, etc.) 18 9

10 Consumer Services Resources finplan.org Free Financial Roadmap Social Security Predictor Brochures, Guides and Worksheets Articles Videos 19 3 rd Party Resources Foundation for Financial Planning (FFP) www. finplan.org National Endowment for Financial Education (NEFE) Federal Deposit Insurance Corporation (FDIC) National Foundation for Credit Counseling (NFCC) MyMoney.gov 20 10

11 Financial planning is something the entire family should embrace 21 Who Is the Target Audience? Underserved and financially distressed individuals and families Most will be individuals and families with low income Those facing special life changes Chapters leaders/members are free to reach are to reach out to others as determined by local needs and capacities 22 11

12 Who Is the Target Audience? For more information, visit: oe o ato st HUD Low Income Threshold 23 Who IS the Target Audience? Chapters are free to reach out to others as are to reach out to others as determined by local needs and capacities Focus on supporting community based organizations that already support the target population 24 12

13 Working with Low Income Clients Are low income pro bono clients different from paying clients? Yes and no. Think basic major problems are likely to be cash flow, debt, limited resources, and short time horizons. Knowledge of the financial system (banking, credit, investing, etc.) may be limited. investing etc 25 Working with Low Income Clients Relationships with family and community y members may be complex. Those on public assistance may face various eligibility thresholds that can affect planning

14 Working with Low Income Clients Adjust language, expectations & recommendations dti Jargon: Terms like asset or liability may be unfamiliar. Expectations: Don t project your priorities in making choices and setting goals. Recommendations: Solutions need to be needto simple. Some common products may be unsuitable. 27 Working with Low Income Clients Educate, Motivate, Support Despite their limitations, people still want to improve their lives and achieve their goals. Help them identify choices and connect them to useful resources in the community

15 Special Planning Challenges Overwhelming debt Lack of access to financial services Predatory lending Income thresholds for public assistance Asset thresholds for public assistance 29 Local Partners Your chapter partners with local nonprofits so members can better serve target populations. betterservetarget The partner organization is also a client and often you will need to teach staff the fundamentals of financial planning and how it relates to their mission. The predetermined partnership with this organization means more opportunities for members and LESS work for the chapter pro bono pro bono director. Partner organizations are important for issues that might affect eligibility for public assistance and other means of support

16 Client Background Domestic violence survivors Wounded servicemembers d Active military personnel Individuals affected by natural disasters People facing special life challenges Decline in their or a loved one s health Job loss Etc. 31 Tips for Success Work with a partner organization To understand clients financial situation, sit ation especially issues that might affect eligibility for public assistance, and identify financial services. To understand clients life situation. Don t go beyond your expertise

17 Tips for Success Respect the client tth t Poverty or ignorance do not mean lazy or stupid. Your job is to find a way to channel some of their effort toward life improving goals and wealth building rather than just survival. 33 Tips for Success Meet with the pro bono client at the the the nonprofit s location This is valuable because they will have access to a phone, computer and printer in case they forgot documents or need to contact a financial institution. The client is familiar with the location 34 17

18 Goals Create a budget/spending plan t/ di Establish a debt management plan Enroll in retirement/pension program Set goals: Long and short term Long Buy a home Pursue degree or trade Short Save for a car Pay off a particular debt 35 Financial Coaching 36 18

19 Financial Coaching Step One: Establish where this client is now Learn about the client s current situation Learn what is important to them Gain a better understanding of why they are seeking assistance it 37 Financial Coaching Step Two: Inquire about the client s goals and objectives Clients hopes Their goals 38 19

20 Step Three: Action Steps Next move Resources Suggestions Financial Coaching 39 Step Four: Accountability Financial Coaching Report progress to a friend or relative Stay on track Clients can use this worksheet or a similar document 40 20

21 Financial Coaching Financial coaching is a collaborative model that puts responsibility on the client, and challenges you to do your best listening. 41 Debt Management 42 21

22 Basic Debt Management Tips Help the client figure out what is owed is owed Balances, interest rates, minimum payments Confirm that the debt must be repaid Figure out how much the client can pay Create a budget 43 Basic Debt Management Tips Set up a SNOWBALL repayment plan SNOWBALL plan Highest interest rate first economical Smallest balance first psychological 44 22

23 Basic Debt Management Tips What are the amounts of debt? h h f db? What is the nature of the debt? Are debts secured or unsecured? Can they be discharged in bankruptcy? How old are the debts? 45 Offer in compromise Innocent Spouse Relief Special strategies Student loans Deferment Consolidation Forgiveness Basic Debt Management Tips Special Strategies Back taxes Installment agreement Offer in compromise Innocent Spouse Relief Student loans Deferment Consolidation Forgiveness 46 23

24 Basic Debt Management Tips Special Strategies Unsecured debt dd Negotiation DMPs Debt "settlement" Special issuesissues Judgment proof Community property 47 Basic Debt Management Tips Special Issues continued: Inherited debt Fair Debt Collection Has the client run free credit report? What has the client already tried? 48 24

25 Debt Management Worksheet From FPAFPA Pro Bono Toolkit 49 More Debt Tips Discuss wants and needs Listen to the client What is the barrier to financial wellness? Start that EMERGENCY FUND Even $500 can make a difference Foster POSITIVE HABITS Set goals to aim for, track spending and rebuild credit 50 25

26 More Spending Plan Ideas 51 Techniques To Track Spending Envelope Calendar Register Receipts No one method is perfect Left over Track expenses for at least one month to get a baseline 52 26

27 Living With a Spending Plans 53 What if the client can t pay? 54 27

28 What If They Can t Pay? Have the client contact the lender Explain why the client fell behind Present a repayment plan Present a budget that backs up the plan Ask for rate reductions and fee waivers Get any creditor agreements in writing agreements in Maryland Cooperative Extension extension.umd.edu/publications/pdfs/fs436. pdf (brochure and letter to creditor template) 55 More Tough Choices Prioritize repayment of debts needed to: Maintain a household (food, rent, utilities) a utilities) Work (car payments) Meet legal obligations (taxes, child support) National Consumer Law Center (prioritizing debts) Federal Trade Commission (Fair Debt Collection Act) 56 28

29 When (and How) to Seek Help The client needs more handholding Credit Counseling Agencies ditc i HUD Housing Counselors 57 When (and How) to Seek Help If the client can t repay in 3 5 years or risks losing house/retirement funds Seek legal advice (Don t say bankruptcy ) Legal Services Corporation (Legal Aid) American Bar Association s Find Legal Help

30 Major Government Resources Available to Low Income Clients No need to be experts but know the basics Taxes Earned Income Tax Credit (EITC) refundable tax credit Savers Credit non refundable credit for retirement savings Major Public Assistance Programs Food Stamps Temporary Assistance for Needy Families (TANF) ili Supplemental Security Income (SSI) Medicaid & State low income health insurance programs 59 More Resources Available to Low Income Clients VITA/TCE free tax prepara on p Individual Development Account (IDA) Community Development Credit Unions and Financial Institutions Legal Aid Develop a list of local resources list of local Check for public benefits Check United Way, etc., for nonprofit resources 60 30

31 Through pro bono financial planning, you have the ability to change lives. 61 Expand of skill set Planner Benefits Opportunity to assist underserved individuals and families Build your professional network Establish/strengthen your relationship with local nonprofits Illustrate the importance of ethical and competent financial planning for all 62 31

32 Summary You don t have to know it all You can decide how much time you have to offer CBO collaboration makes the engagement easier to manage It is amazing to help people change their lives to people their lives for the better! 63 Thank You The following people assisted with the development of this presentation: Jon P. Beyrer, CFP, EA Chia Li Chien, CFP,CRPC,PMP Saundra Davis, MSFP Diana DeCharles, CFP, MBA Omega Hartman, CFP Lori Irwin, CFP, MBA Anja Luesink, MBA, CFP, RLP Catherine Restivo, CFP Vicki Van Horn, CFP For immediate questions about this Boot Camp, The Foundation For Financial Planning Noreenc@foundation-finplan.org 64 32