What do you think FINANCIAL planning can do for you?
A financial plan acts as a guide through your financial voyage and, even if marital and global upheavals dent your investments, it will help you get back on track. Investment planning influences each aspect of personal finance, including taxation, insurance or achievement of pre-defined goals.
Anybody can write down a financial plan, or at least it seems that way. You can consult your banker, Financial Planner, go to a brokerage firm, or hire someone who calls himself or herself a financial planner to prepare a plan for you. Financial planning just isn’t that complicated, right?
Let’s think about what’s included in a complete financial plan.
Not to be morbid but have you set up your financial plan to take effect if you die today? Will estate taxes be due? Does your estate have sufficient liquidity? One more part outlines what happen if you become disabled or need hospice care. Have you saved adequate for retirement? And how will you pay for your kids’ or grandkids’ college schooling? What about income tax savings, and investment allocation?
The primary and important place to start is selecting the correct person to build up a financial plan. Find someone with a fiduciary responsibility which can only be a Certified Financial Planner. Your attorney or your banker may not be qualified in this area.
It is important to try to find someone who will listen and if needed help you cultivate your life plan which includes your goals, dreams and aspirations for your family. Make sure the person you hire to draft your early financial plan is experienced with planning and understands clearly that one area of your financial plan structure can affect outcome of another part of your plan.
For instance, what you do in the area of investment planning can influence your tax planning. What you do to grant for asset protection can influence your estate planning, and so on and so forth.
A sound financial plan should also address how you are expected to respond when placed in a variety of scenarios that happens in life. When an unexpected situation occurs most people will tend to make major decisions based on emotion and then try to rationalize them, undermining their long-term planning. Therefore, a solid financial plan should be flexible enough to accommodate the unexpected. This is especially true in the investment-planning.
It is important to have a written investment policy statement to help protect your portfolio from unplanned and impulsive revisions of sound long-term policy. Especially in times of market turmoil, investors without an investment policy statement are inclined to make investment decisions that are inconsistent with prudent investment management principles–and their best interest. Your investment policy provides an agreed-upon and well-thought-out framework from which sound investment decisions will be made.
Financial Planning Does Not End with the Plan is Created!
It’s just the Beginning. Many people believe the process ends once the plan is written. But good financial planning means regularly monitoring and adapting strategies to ensure you’re meeting your goals. Remember, you’re not just trying to create an end product that won’t ever need to change.
Many people can help you prepare a financial plan, but the most successful plans are crafted by professional planners whose allegiance is to you, the client. And professional financial planners will follow up with you after the plan is in place to assist in analyzing deviations from the plan in order to make competent adjustments to steer you away from failure.
Be particularly wary of brokers and financial agents who are keen to take control of your finances but don’t take the time to really discuss your life plan and don’t seem really interested in your long term financial planning. Having a trusted ally that is up to date on your life details they can practice watchfulness over your asset planning and make decisions based on proven systems and the framework you built together. This is what good solid financial planning is as good as insurance for your finances.
