The Bucket Plan

We’ve all heard of the bucket plan. It has traditionally been used as a way to categorize money for a specific purpose, such as fixed expenses, discretionary spending, and legacy planning. For many years, advisors, agents, reps, and planners have used the term “bucket” plan to essentially sell financial products and show how their product was the best to accomplish the objective of each bucket.

At Clarity 2 Prosperity, we’re always looking to change things for the better, and our definition of The Bucket Plan couldn’t be further from this dated, sales-pitch approach. Our proven, repeatable process has been developed and refined over the past 10 years based on field testing by advisors around the country and meets the documentation requirements of the best interest standard.

Recently, C2P Enterprises’ CEO & Founder, Jason L Smith, and Executive Vice President & Co-Founder, Dave Alison, were interviewed about the Bucket Plan Process by Wade Pfau, leading retirement income expert and Director of the Retirement Income Certified Professional® (RICP®) program at The American College of Financial Services. The Bucket Plan process has been recognized as a proven approach for turning assets into income and has been incorporated as part of The College’s RICP® curriculum.

Jason and Dave are among more than 45 of the nation’s top financial retirement advisors to help develop this program.

Our Bucket Plan Methodology

The Bucket Plan is a holistic way to incorporate all of your client’s assets – investments, insurance, taxes, estate planning, Social Security and retirement income – and provide them with a plan that will meet their retirement goals. It accounts for the variables that can negatively affect the long-term success of a financial plan (like volatility, taxes, inflation and life expectancy) and segments a client’s assets based on income needs, time horizon, and tax qualifications.

The key to a successful bucket plan is strategically positioning, and then protecting, a mutually agreed-upon portion of your client’s assets in order to buy a time horizon that allows them to invest the remainder for long-term growth. We accomplish this by establishing three phases, or buckets: the immediate (Now), the short term (Soon), and the long term (Later).


The Bucket Plan Process for Financial Advisors

The “Now” Bucket

This is the client’s safe and liquid money. It’s typically kept at a bank in a checking, savings, or money market account. This bucket has three primary purposes:

  • Emergency fund
  • Big, planned expenses over the next couple years (cars, weddings, home repairs, etc.)
  • Income for the first year of retirement (if they are retiring or already retired)

The “Soon” Bucket

This bucket contains the money the client will use sooner rather than later. If they are currently retired or getting ready to retire, this would be the money needed to fund their first phase of retirement. If a client is younger or has a long time before they retire, this would be any money they could access penalty-free, if they needed assets outside of the Now Bucket. The Soon Bucket should also include an inflationary hedge so there are enough funds to increase the income to keep pace with inflation when drawing from this bucket during the first phase of retirement.

The “Later” Bucket

Now that the client has purchased a time horizon with the money in the Now and Soon Buckets, it’s time to review the Later Bucket. Since this is the money the client will not need to draw from until the later years of retirement (generally 10 years or longer), we can confidently invest it in more long-term, growth-oriented investments. As the Soon Bucket is spent down over time, the Later Bucket is used to replenish it. In addition to growth and income, it is critical to educate the client on long-term care, disability, and legacy planning in the Later Bucket as well.

Benefits of The Bucket Plan for you and your Clients

Adopting the Bucket Plan process as the way you do business has a myriad of benefits for your clients, but it also has benefits for you as their advisor.

Educates your clients on their financial status and engages them in the planning, so they feel more confident in the recommendation you prepare for them.

Eliminates any confusion for advisors around meeting the best interest standard and creating the compliance documentation needed to support the decisions that went into the plan.

Differentiates your business and helps you scale by not having to reinvent the wheel for every client. Using proven, documented processes every step of the way will improve both your reputation and your bottom line. Clients will want to work with you because they know what to expect.

Let’s Talk

Schedule a call today and discover how other elite advisors are transforming their financial practice and reaching new heights of business success with our proven processes, training, coaching and mentoring and how you can join them!

Learn More About The Bucket Plan

An Asset Allocation Strategy Your Clients Will Actually Understand

Many advisors communicate asset allocation with pie charts of holdings, graphs, ledgers, and statistical analysis. All that data may be important behind the scenes, but it confuses the client. Here’s how the Bucket Plan philosophy simplifies asset allocation in a way your client can understand and feel confident moving forward with your recommendations

Designing Your Client’s Bucket Plan

Designing a financial plan can be as much an art as it is a science. There are so many variables, assumptions, and unknowns that attempting to model out your recommendations can easily overwhelm a client or prospective client. Once you have gathered all the financial information from your client and have a clear understanding of their current situation and their volatility tolerance for each phase, it’s time to design their Bucket Plan

Get your FREE The Bucket Plan® Book Today

The financial planning process outlined in the award-winning book is based on a three-bucket philosophy of strategically positioning assets to plan for and mitigate the risks and dangers that can occur in retirement. Get started on planning your clients’ financial future by requesting a FREE copy of the book here!

The Bucket Plan Process for Financial Advisors

The Bucket Plan® On-Demand Series

Industry leading financial advisors, mentors, and business leaders host and interview top industry experts and advisors on actionable financial planning strategies to grow your business and stay ahead of your competition. Listen to The Bucket Plan On-Demand Series and check out our other resources here!