FINANCIAL PLANNING: HELPING YOU SEE THE BIG PICTURE
- Posted by Michael Kane, CFP®
- On May 7, 2017
- decisions, peace of mind, plan
Do you picture yourself retiring comfortably, paying off all your debt, starting a new business or traveling extensively? These are a few of the retirement goals that may be important to you, and each comes with a price tag attached.
That’s where financial planning comes in. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources. More importantly, this process cannot start early enough.
WHY IS FINANCIAL PLANNING IMPORTANT?
A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them. One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related – for example, how saving for your children’s college education might impact your ability to save for retirement. Then you can use the information you’ve gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you’ll know that your financial life is headed in the right direction.
Creating and implementing a comprehensive financial plan generally involves working with financial professionals
- Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
- Establish and prioritize financial goals and time frames for achieving these goals
- Implement strategies that address your current financial weaknesses and build on your financial strengths
- Choose specific products and services that are tailored to help meet your financial objectives
- Monitor your plan, making adjustments as your goals, time frames, or circumstances change
SOME MEMBERS OF THE TEAM
- The financial planning process can involve a number of professionals.
- Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.
- Accountants or tax attorneys provide advice on federal and state tax issues.
- Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.
- Insurance professionals evaluate insurance needs and recommend appropriate products and strategies.
- Investment advisors provide advice about investment options and asset allocation and can help you plan a strategy to manage your investment portfolio.
The most important member of the team, however, is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.
WHY CAN’T I DO IT MYSELF?
You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require
expertise in several areas. A financial professional can give you objective information and help you weigh your
alternatives, saving you time and ensuring that all angles of your financial picture are covered.
STAYING ON TRACK
The financial planning process doesn’t end once your initial plan has been created. Your plan should generally be
reviewed at least once a year to make sure that it’s up-to-date. It’s also possible that you’ll need to modify your plan
due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a
review of your financial plan:
- Your goals or time horizons change
- You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
- You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a
retirement account, paying long-term care expenses)
- Your income or expenses substantially increase or decrease
- Your portfolio hasn’t performed as expected
- You’re affected by changes to the economy or tax laws
COMMON QUESTIONS ABOUT FINANCIAL PLANNING
What if I’m too busy?
Don’t wait until you’re in the midst of a financial crisis before beginning the planning process. The sooner you start,
the more options you may have.
Is the financial planning process complicated?
Each financial plan is tailored to the needs of the individual, so how complicated the process will depend on
your individual circumstances. But no matter what type of help you need, a financial professional will work hard to
make the process as easy as possible, and will gladly answer all of your questions.
What if my spouse and I disagree?
A financial professional is trained to listen to your concerns, identify any underlying issues, and help you find
common ground. Finding that common ground could be the key to a successful financial plan and retirement.
Can I still control my own finances?
Financial planning professionals make recommendations, not decisions. You retain control over your finances.
Recommendations will be based on your needs, values, goals, and timeframes. You decide which recommendations to follow, then work with a financial professional to implement them.
If you have additional questions about financial planning or would like to discuss how we can help, request a complimentary consultation with an advisor.
Disclaimer: This blog is intended for informational purposes only and should not be construed as individual investment advice. Actual recommendations are provided by RAA following consultation and are custom-tailored to each investor’s unique needs and circumstances. The information contained herein is from sources believed to be accurate and reliable. However, RAA accepts no legal responsibility for any errors or omissions. Investments in stocks, bonds, and mutual funds may increase or decrease in value. Past performance is no guarantee of future results. Any of the charts and graphs included in this blog are not recommendations for the purchase and sale of any security.