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Financial Planning

In general, financial planning is the process by which a client works with a qualified advisor to identify assets and resources to be used to accomplish future goals and commitments. The plan involves a series of steps to identify spending patterns through proper budgeting and organize finances and savings for specific uses such as college, retirement, emergency reserves, etc. The plan is often called to allocate resources in a certain way for a future goal and provides a recommendation for the best use of income and assets to accomplish this. An investment, retirement, estate, tax and college plan may be part of the overall picture with the focus for each of these goals to be satisfied without contradicting another part of the plan. Therefore, it is recommended that you work with a CERTIFIED FINANCIAL PLANNERTM (CFP)®.

Your planner will want to see detailed information in all areas to make certain objectives are being met without negating another part of the plan. A good financial plan will meet more than one objective with a single dollar such as: saving for retirement while reducing taxes through pre-tax funding; saving for college through the state 529 to get the state income tax deduction, etc.

Financial plans are only as good as the information provided and as good as the on-going updates and implementation. Financial planning is an evolution, not a finite process. Those who stay involved and current in their planning will likely have the best results.

Risk management and investments are often an integral part of using potential returns to help meet your goals. Therefore, it is crucial to be honest and thorough in the data gathering and risk finding process. Your advisor will use this information to design a portfolio for you. Then you should communicate on a regular basis how you are handling any volatility or any changes to your situation that will impact the agreed-upon strategy. Once an initial plan is completed, it should be updated with the various implementation steps in order to stay current with tax laws, the investment environment, estate planning changes and overall general economic conditions that may impact you.

There are six main areas to a comprehensive financial plan:

  1. Set goals and identify resources.
  2. Risk management including proper insurance planning for life, health, disability and elder care.
  3. Tax planning for income and assets, estates and businesses.
  4. Retirement planning or long-range future planning which includes inflation factors and taxes as part of the stated financial need in the future.
  5. Investment planning and portfolio design, including diversification, risk mitigation, proper allocation and rebalancing including due diligence on investment selection and overall strategy for proper risk/reward ratio for each given goal.
  6. Estate planning includes planning for passing on your estate; settling the estate of a family member; planning for elder care expenses; tax and gifting strategies; correct registrations and beneficiary designations

The financial plan process includes:

  1. Establish and define the client-planner relationship
  2. Gather financial data and discuss goals and objectives.
  3. Analyze and evaluate the current financial situation. Align resources and goals to meet client’s objectives while providing education and information on each area of the financial plan.
  4. Develop and present the recommendations and alternatives in an objective manner. Create tools such as cash flow, net worth, retirement and college future value calculations designed to provide a realistic structure to the overall plan.
  5. Discuss the plan and the options for improvement and implement necessary changes.
  6. Monitor the plan and update plan as needed. Track changes and improvements as stepping stones to reach the next level of advice and implementation.


Estate Planning

Small Businesses