Financial Planning
What is Financial Planning?
Financial planning is the process of assisting a client define, ascertain, and develop a plan for achieving their financial goals and objectives. A financial plan may be topical and address just one particular problem or goal of the client. A plan can also be comprehensive in nature and provide analysis and recommendations on many areas of concern. Financial planning is best understood within the 6-step planning process itself as it provides a meaningful framework for serving clients with simple or complex financial needs.
The Benefits of Financial Planning
Financial planning provides purpose and direction to your financial decisions and life. Developing a financial plan is a proactive approach to wealth management. Rather than ignoring the future and reacting to life events as they occur, financial planning provides the opportunity for you to make more informed decisions before a crisis occurs as you consider how each decision affects other areas of your finances. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your net worth and life goals. You can also adapt more easily to life events and potentially feel more secure knowing that you are on track towards reaching your goals.
Who Needs Financial Planning?
Most people will benefit from formal financial planning at some point in their lives. However, for those clients where the timing and situation may not be ideal, the best plan initially may be to focus all of their energy and resources on simply getting out of debt, building their emergency reserves, and protecting their family in the event of a major risk such as a premature death, disability, or major medical expense. For other individuals and families with stable employment, discretionary income, limited debt, and a desire to proactively take control of their current and future financial situation, financial planning may be the best strategy with the most impact.
You may already be aware that your finances need improvement or that you do not have enough time or expertise in certain areas of finance to make well-informed decisions. But where do you start? You may decide to seek help from a professional financial planner if you have questions in the following areas:
- Cash Flow: Do I have enough discretionary income to meet my financial goals? Is my net worth appropriate give my age and income? How should I allocate my discretionary income towards my competing financial goals? Can I or should I pay off my home mortgage early.
- Retirement: When can I retire successfully? How much should I be saving for retirement? How much investable assets do I need in order to retire comfortably? Should I contribute to a Roth IRA or Traditional IRA? Should I contribute to my retirement plan through work if there is no match? Should I contribute to a taxable investment account? When should I start my Social Security or Pension benefits?
- Investments: What investment return do I need before and during retirement to reach my retirement income goals? How should I invest within my 401(k) and other investment accounts? Am I properly diversified? Should I invest in international, emerging markets, or real estate stock funds? Am I taking too much risk or too little risk within my investment portfolio?
- Insurance: Will my family and financial goals remain on track if I get sick or hurt and cannot work? Will my business succeed and business interest be protected if I become disabled or die? How much and what type of life insurance do I need? Do I need life insurance after I retire? How can we protect our family estate and preserve choice in care from potential long-term care expenses?
- Estate: Who will receive my assets when I die? When and what type of trust should I consider? How much can I leave behind to my family and charity while still maintaining my desired retirement lifestyle? How can I reduce my estate tax liability? How should I title assets? Who will manage my finances, make healthcare decisions, and/or raise my children if I cannot? I already have a Will, should it be updated? How can I protect my spendthrift beneficiary from squandering their inheritance? How can I protect my special needs child? How can I protect my spouse and children’s financial interests after I die?
To read more about our financial planning process, click here. Financial planning services may be provided by your investment advisor representative through our affiliated RIA, Financial Advocates Investment Management, as a fee-based service separate and independent from our fee-based asset management services. Situational or comprehensive financial plans can either be engaged on a one-time fee bases or through on-going annual retainer fees to accommodate initial and future plan updates. Customary financial planning fees may be waived, however, for those advisory clients who retain us to provide discretionary fee-based asset management services on household investment accounts totaling $750,000 or more.