Boot Camp
FPA Pro Bono Boot Camp How to successfully provide pro bono financial advice in your community!
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
1
Impact of Pro Bono
• Through pro bono financial planning, FPA members have been able to aid thousands of people who lacked access to financial planners • 9/11 survivors and first responders • Those impacted by cancer and other illnesses • Active, wounded and retired servicemembers • Victims of natural disasters Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
2
Power of Pro Bono • Pro bono engagements have led to clients: • Paying off outstanding debt • Saving enough money to buy a car • Renting/purchasing a home • Going back to school and furthering their education • Investing in retirement plans
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
3
Planner Benefits • Expand of skill set • 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 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
4
Pro Bono Financial Planning
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
5
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! Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
6
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 out to others as determined by local needs and capacities
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
7
Client Background • • • • •
Domestic violence survivors Wounded servicemembers 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. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
8
Pro Bono Activities
• Group workshops/presentations • One-on-one consultations • 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) Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
9
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 – use the Letter of Engagement or Sign-up Sheet • Work with your FPA Chapter • Record Results and Outcomes
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
10
Volunteer Eligibility • To serve as an FPA pro bono volunteer providing financial planning education to the public, individuals must: • Be a FPA member in good standing, and • Complete FPA’s Pro Bono Boot Camp training session, and • Sign the pro bono letter of engagement that states he/she will take responsibility for services provided in the engagement, and • Be a CFP professional in good standing with CFP Board, or • Be a non CFP professional who agrees to abide by FPA’s Code of Ethics and Standard of Care and who works in conjunction with a CFP practitioner. Adopted November 20, 2015 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
11
Regulations and Compliance • CFP® Code of Conduct applies to pro bono engagement • 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
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 Use your own letter if desired or needed
• Federal Volunteer Protection Act of 1997 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
13
Financial Planners
What you do matters! Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
14
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.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
15
Client Engagement Process 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
16
Pro Bono Engagement • Limited, not ongoing
• Empower clients help themselves • Involves basic financial coaching: goal setting, data gathering, budgeting, debt management. • Formulate a plan or action steps. Pro Bono Engagement = Client Agreement Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
17
Available Planner Resources www.connect.onefpa.org www.foundation-finplan.org • Pro Bono 360 Group (Library) • Pro Bono Director Chapter Leaders
Consumer Services Resources
www.plannersearch.org • Brochures, Guides and Worksheets • Articles Foundation for Financial Planning (FFP) www.foundation-finplan.org/consumer-resources Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
18
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. • Relationships with family and community members may be complex. • Those on public assistance may face various eligibility thresholds that can affect planning. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
19
Working with Low Income Clients • Adjust language, expectations & recommendations – 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 simple. Some common products may be unsuitable. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
20
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.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
21
Special Planning Challenges • • • • •
Overwhelming debt Lack of access to financial services Predatory lending Income thresholds for public assistance Asset thresholds for public assistance Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
22
Local Partners (CBOs)
• Local nonprofits help you better serve target populations. • The partner organization is also a “client” 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 • less work for the chapter pro bono director.
• CBOs understand eligibility factors for public assistance and other support. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
23
Tips for Success • Work with a partner organization – To understand clients’ financial situation, especially issues that might affect eligibility for public assistance, and identify financial services. – To understand clients’ life situation. Don’t go beyond your expertise.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
24
Tips for Success • Respect the client
– Poverty or ignorance do not mean lazy or stupid. – Clients in financial crisis often think in very short term actions. Once they are through the crisis they can focus on longer-term wellness.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
25
Tips for Success • Meet with the pro bono client at the nonprofit’s location • Non-profit 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
26
Goals • • • •
Create a budget/spending plan 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
27
Financial Coaching
Financial coaching is a collaborative model that puts responsibility on the client, and challenges you to do your best listening. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
28
Financial Coaching Step One: Assessment •Learn about the client’s current situation •Learn what is important to them •Gain a better understanding of why they are seeking assistance •Assess Assets and Liabilities Step Two: Goal Setting Step Three: Action Steps Step Four: Accountability Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
29
Building A Spending Plan Review Historical Spending Determine Planned Direction for Spending Monthly • Consider Timing of Income and Expected Due Dates on bills • Allocate funds to debt repayment • Allocate funds to savings Track Current Spending for 30 – 60 Days Compare Actual Spending with Plan Use Resources in Toolkit Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
30
Techniques To Track Spending • “Envelope” • “Register” • “Receipts” • • •
• “Calendar” • “Left over”
No one method is perfect Track expenses for at least one month to get a baseline Living with a Spending Plan Worksheet
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
31
Debt Management
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
32
Basic Debt Management Tips • Help the client figure out what is owed – Balances, interest rates, minimum payments – Confirm that the debt must be repaid – Reference: Annual Credit Report
• Figure out how much the client can pay based on budget
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
33
Basic Debt Management Tips • Set up a SNOWBALL repayment plan – Highest interest rate first – economical – Smallest balance first – psychological
– Use Toolkit Debt Management Worksheet – Online free tool www.powerpay.org
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
34
Basic Debt Management Tips Special Strategies Back taxes – Not Dischargeable in Bankruptcy •Installment agreement •Offer in compromise •Innocent Spouse Relief •Resource: IRS Tax Advocate
Student loans – Not Dischargeable in Bankruptcy •Deferment •Income Based Payment Plan •Consolidation •Forgiveness
35
Basic Debt Management Tips Special Strategies for Unsecured debt • Validation • Negotiation • DMPs • Debt "settlement“ • Judgment proof • Community property
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
36
What if the client can’t pay?
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
37
What If They Can’t Pay? • Client should pro actively reach out to creditors to negotiate payments/settlements • 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 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
38
More Tough Choices • Prioritize repayment of debts needed to: ⁻ Maintain a household (food, rent, utilities) ⁻ Work (car payments) ⁻ Meet legal obligations (taxes, child support) • Federal Trade Commission ⁻ Fair Debt Collection Act ⁻ Debt Validation Letter Template ⁻ DIY Debt Repayment Strategies Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
39
When (and How) to Seek Help • The client needs more handholding – Credit Counseling Agencies www.NFCC.org
– HUD Housing Counselors
www.hud.gov/offices/hsg/sfh/hcc/hccprof14 .cfm
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
40
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) www.lsc.gov – American Bar Association’s Find Legal Help www.findlegalhelp.org
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
41
FPA Connect Resources
• Pro Bono 360 • Presentations • Toolkits (Pro Bono Toolkit) • Letter of Engagement • Eligibility Policy • Pro Bono Guidelines • Toolkits for partnering with specific populations • Worksheets • Money Tree Silver – Free for Pro Bono Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
42
Major Government Resources
• Taxes
– Earned Income Tax Credit (EITC) – Child Tax Credit (CTC) – Savers Credit –credit for retirement savings
• Major Public Assistance Programs Food Stamps Temporary Assistance for Needy Families (TANF) Supplemental Security Income (SSI) Medicaid & State low-income health insurance programs – Section 8 Housing Programs – – – –
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
43
More Resources Available
• VITA/TCE ̶ free tax preparation • Individual Development Account (IDA) • Community Development Credit Unions and Financial Institutions • Legal Aid • Develop a list of local resources – Check www.benefits.gov for public benefits – 2-1-1 – Check United Way, etc., for non-profit resources Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
44
Through pro bono financial planning, clients are empowered to affect financial change.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
45
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 for the better!
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
46
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® L. Lori Irwin, CFP®, MBA Anja Luesink, MBA, CFP®, RLP Catherine Restivo, CFP® Vicki Van Horn, CFP®
For immediate questions about this Boot Camp, e-mail The Foundation For Financial Planning www.foundation-finplan.org (202) 864-5183 [email protected] 47
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
1
Impact of Pro Bono
• Through pro bono financial planning, FPA members have been able to aid thousands of people who lacked access to financial planners • 9/11 survivors and first responders • Those impacted by cancer and other illnesses • Active, wounded and retired servicemembers • Victims of natural disasters Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
2
Power of Pro Bono • Pro bono engagements have led to clients: • Paying off outstanding debt • Saving enough money to buy a car • Renting/purchasing a home • Going back to school and furthering their education • Investing in retirement plans
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
3
Planner Benefits • Expand of skill set • 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 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
4
Pro Bono Financial Planning
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
5
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! Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
6
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 out to others as determined by local needs and capacities
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
7
Client Background • • • • •
Domestic violence survivors Wounded servicemembers 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. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
8
Pro Bono Activities
• Group workshops/presentations • One-on-one consultations • 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) Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
9
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 – use the Letter of Engagement or Sign-up Sheet • Work with your FPA Chapter • Record Results and Outcomes
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
10
Volunteer Eligibility • To serve as an FPA pro bono volunteer providing financial planning education to the public, individuals must: • Be a FPA member in good standing, and • Complete FPA’s Pro Bono Boot Camp training session, and • Sign the pro bono letter of engagement that states he/she will take responsibility for services provided in the engagement, and • Be a CFP professional in good standing with CFP Board, or • Be a non CFP professional who agrees to abide by FPA’s Code of Ethics and Standard of Care and who works in conjunction with a CFP practitioner. Adopted November 20, 2015 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
11
Regulations and Compliance • CFP® Code of Conduct applies to pro bono engagement • 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
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 Use your own letter if desired or needed
• Federal Volunteer Protection Act of 1997 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
13
Financial Planners
What you do matters! Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
14
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.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
15
Client Engagement Process 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
16
Pro Bono Engagement • Limited, not ongoing
• Empower clients help themselves • Involves basic financial coaching: goal setting, data gathering, budgeting, debt management. • Formulate a plan or action steps. Pro Bono Engagement = Client Agreement Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
17
Available Planner Resources www.connect.onefpa.org www.foundation-finplan.org • Pro Bono 360 Group (Library) • Pro Bono Director Chapter Leaders
Consumer Services Resources
www.plannersearch.org • Brochures, Guides and Worksheets • Articles Foundation for Financial Planning (FFP) www.foundation-finplan.org/consumer-resources Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
18
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. • Relationships with family and community members may be complex. • Those on public assistance may face various eligibility thresholds that can affect planning. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
19
Working with Low Income Clients • Adjust language, expectations & recommendations – 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 simple. Some common products may be unsuitable. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
20
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.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
21
Special Planning Challenges • • • • •
Overwhelming debt Lack of access to financial services Predatory lending Income thresholds for public assistance Asset thresholds for public assistance Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
22
Local Partners (CBOs)
• Local nonprofits help you better serve target populations. • The partner organization is also a “client” 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 • less work for the chapter pro bono director.
• CBOs understand eligibility factors for public assistance and other support. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
23
Tips for Success • Work with a partner organization – To understand clients’ financial situation, especially issues that might affect eligibility for public assistance, and identify financial services. – To understand clients’ life situation. Don’t go beyond your expertise.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
24
Tips for Success • Respect the client
– Poverty or ignorance do not mean lazy or stupid. – Clients in financial crisis often think in very short term actions. Once they are through the crisis they can focus on longer-term wellness.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
25
Tips for Success • Meet with the pro bono client at the nonprofit’s location • Non-profit 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
26
Goals • • • •
Create a budget/spending plan 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
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
27
Financial Coaching
Financial coaching is a collaborative model that puts responsibility on the client, and challenges you to do your best listening. Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
28
Financial Coaching Step One: Assessment •Learn about the client’s current situation •Learn what is important to them •Gain a better understanding of why they are seeking assistance •Assess Assets and Liabilities Step Two: Goal Setting Step Three: Action Steps Step Four: Accountability Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
29
Building A Spending Plan Review Historical Spending Determine Planned Direction for Spending Monthly • Consider Timing of Income and Expected Due Dates on bills • Allocate funds to debt repayment • Allocate funds to savings Track Current Spending for 30 – 60 Days Compare Actual Spending with Plan Use Resources in Toolkit Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
30
Techniques To Track Spending • “Envelope” • “Register” • “Receipts” • • •
• “Calendar” • “Left over”
No one method is perfect Track expenses for at least one month to get a baseline Living with a Spending Plan Worksheet
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
31
Debt Management
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
32
Basic Debt Management Tips • Help the client figure out what is owed – Balances, interest rates, minimum payments – Confirm that the debt must be repaid – Reference: Annual Credit Report
• Figure out how much the client can pay based on budget
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
33
Basic Debt Management Tips • Set up a SNOWBALL repayment plan – Highest interest rate first – economical – Smallest balance first – psychological
– Use Toolkit Debt Management Worksheet – Online free tool www.powerpay.org
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
34
Basic Debt Management Tips Special Strategies Back taxes – Not Dischargeable in Bankruptcy •Installment agreement •Offer in compromise •Innocent Spouse Relief •Resource: IRS Tax Advocate
Student loans – Not Dischargeable in Bankruptcy •Deferment •Income Based Payment Plan •Consolidation •Forgiveness
35
Basic Debt Management Tips Special Strategies for Unsecured debt • Validation • Negotiation • DMPs • Debt "settlement“ • Judgment proof • Community property
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
36
What if the client can’t pay?
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
37
What If They Can’t Pay? • Client should pro actively reach out to creditors to negotiate payments/settlements • 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 Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
38
More Tough Choices • Prioritize repayment of debts needed to: ⁻ Maintain a household (food, rent, utilities) ⁻ Work (car payments) ⁻ Meet legal obligations (taxes, child support) • Federal Trade Commission ⁻ Fair Debt Collection Act ⁻ Debt Validation Letter Template ⁻ DIY Debt Repayment Strategies Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
39
When (and How) to Seek Help • The client needs more handholding – Credit Counseling Agencies www.NFCC.org
– HUD Housing Counselors
www.hud.gov/offices/hsg/sfh/hcc/hccprof14 .cfm
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
40
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) www.lsc.gov – American Bar Association’s Find Legal Help www.findlegalhelp.org
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
41
FPA Connect Resources
• Pro Bono 360 • Presentations • Toolkits (Pro Bono Toolkit) • Letter of Engagement • Eligibility Policy • Pro Bono Guidelines • Toolkits for partnering with specific populations • Worksheets • Money Tree Silver – Free for Pro Bono Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
42
Major Government Resources
• Taxes
– Earned Income Tax Credit (EITC) – Child Tax Credit (CTC) – Savers Credit –credit for retirement savings
• Major Public Assistance Programs Food Stamps Temporary Assistance for Needy Families (TANF) Supplemental Security Income (SSI) Medicaid & State low-income health insurance programs – Section 8 Housing Programs – – – –
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
43
More Resources Available
• VITA/TCE ̶ free tax preparation • Individual Development Account (IDA) • Community Development Credit Unions and Financial Institutions • Legal Aid • Develop a list of local resources – Check www.benefits.gov for public benefits – 2-1-1 – Check United Way, etc., for non-profit resources Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
44
Through pro bono financial planning, clients are empowered to affect financial change.
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
45
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 for the better!
Created with Grant Sponsorship from the Foundation for Financial Planning Copyright © Financial Planning Association®.
46
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® L. Lori Irwin, CFP®, MBA Anja Luesink, MBA, CFP®, RLP Catherine Restivo, CFP® Vicki Van Horn, CFP®
For immediate questions about this Boot Camp, e-mail The Foundation For Financial Planning www.foundation-finplan.org (202) 864-5183 [email protected] 47
