3 C’s of effective checklists 

Checklists have transformed the way I do business. Good checklists are about better conversations. Don’t try to gather data or information, net worth statements or income statements using a checklist. 

Good checklists should be clear and precise. Bad checklists will be vague and confusing. If your 10-year-old son or daughter cannot understand or answer the questions on your checklist, they are probably too confusing. 

Good checklists are to the point. Bad checklists are too long. We’ve all dealt with bad checklists. I deal with them every day when I go to fill in an insurance application and there are 47 pages. The insurance app is basically a checklist, but it is way too long, way too confusing and just doesn’t work. 

Good checklists are also easy to use. They should ask multiple-choice questions. They should ask yes-or-no questions. Bad checklists are just really easy to quit. 

Good checklists are also engaging. Bad checklists are mind-numbing. Finally, good checklists should be based on your experience. Bad checklists tend to be made by head office types. 

Here are the first three of the seven C’s of effective checklists: 

1. Categorize

The very first checklist I created had too much. It was big. It was long. It broke all the rules. Most of my checklists fit on one page, sometimes a second page. I discovered that you should try to categorize long checklists. My financial insights checklist had too many questions. I discovered that I could categorize it into the six elements of financial planning, so I broke it into questions related to financial management, investment management, risk management or insurance, tax planning and retirement planning. 

I also then needed questions about estate planning, but, because I deal with both individuals and businesses, I broke it into two more: estate planning for individuals and estate planning for business owners. If I am going to meet with clients to do an insurance review or an investment review, or only talk about retirement planning or estate planning, I hand them one of these checklists in advance of the meeting. 

I’ve had this checklist completed by hundreds of individual clients, and at seven pages, takes no more than 15 minutes to complete because there is no real thinking. It’s multiple-choice, and it’s yes or no. They don’t need to know exactly how much they have in an investment portfolio or anything else. 

2. Conversation

Checklists should lead to better conversations. r At the bottom of my investment management checklist, I have a place for additional information. This isn’t for the clients. This is for me. 

The first question is “Do you have an investment portfolio?” “Yes.” Then ask them how much they own or where it is or what the asset allocation or risk tolerance is. “Yeah, we have an investment portfolio.” Now, I can ask them more questions. “Tell me about that portfolio. Where is it? Who is your advisor? Why are you invested?” Through conversation and another half-hour, I can virtually gain a high-level understanding of everything the clients have and their needs and their attitudes toward different things. 

We discovered through the years that fact-finding was the biggest friction point in the financial planning process for me. I have virtually eliminated that friction point. 

3. Creative

Be creative. Checklists solve problems. One of mine was using engagement letters when working with other advisors. Most of them didn’t have one, or I wasn’t included in the engagement letter. So, I created an engagement letter checklist. It is sort of a hybrid. The first thing is services to be provided. After talking to the client, I can check them all off, or I can only do a risk management or insurance review. 

Also, I have a checklist for compensation. The advantage is that not only can I clearly explain to them how I get paid for the services I provide, but I also get to talk to them about all the other ways of paying for service. 

Dave Faulkner is a co-founder of two successful financial planning technology startups, FP Solutions and Razor Logic Systems. Hear four more C’s of effective checklists in MDRT Presents: