Personal Financial Planning Areas and The Financial Planning Process
Personal Financial Planning Subject Areas- are the basic
subject fields covered in the financial planning process which
typically include, but are not limited to:
* Financial statement preparation and analysis including
cash flow analysis for the preparation of a budget and determine
your net worth.
* Investment planning including portfolio design, asset allocation
and portfolio management.
* Income tax planning with the goal of minimizing federal and state
* Education planning for your children and grandchildren.
* Risk management through insurance planning with the
goal of protecting your assets and earning power.
* Retirement planning regardless of what your age is and
taking advantage of all employee benefit plans.
* Estate Planning for ways to pass assets accumulated
during your lifetime to your heirs.
A complete personal financial planning process will cover
all of the above areas. Emphasis on each area depends on
your age, family budget, net worth and your goals. It is impossible
to cover retirement planning without covering investment planning,
tax planning, risk management and maybe even estate planning.
However, segmented planning can be done for a specific area
such as "Am I on track to retire" at a specific point in time? Can I retire now?
Or is my portfolio properly allocated? Do I have an estate tax problem
based upon my net worth?
The most popular request we have been doing is helping clients
made a decision if the can retire now. A current budget is prepared and
a net worth statement is compiled. From this point we review all client assets,
project future spending based upon current needs and future requirements as
we include other factors the client may not think of or omit. We then look at all assets,
retirement assets and social security to meet these needs and factor in both investment
growth rates and inflation.
A report is prepared and presented to client with our written conclusions in a concise and
easy to read reports. Most of our report is written to the client's situation and you do not get
a "canned report" of just schedules to confuse you .
In addition, we will offer other recommendations for you to consider that may cover other
areas such as cash management, insurance planning and estate planning. This is based upon our
review of material you submitted. We want to offer the client a full financial service without any
particular product to sell. You are buying our time for us to serve and educate you the client and
your particular situation.
The Financial Planning Process- is the process which includes:
1. Establishing and defining the client-planner relationship. The scope
of the work to be done is to be agreed upon with you the client and
the planner. No financial products are even mentioned.
2. Gathering client data which includes determining a client's personal
and financial goals,needs and priorities and then obtaining from you the
client the required quantitative information and document the planner needs.
3. Analyzing and evaluating the client's current financial status based upon
the documents submitted.
4. Developing and presenting financial recommendations with the client's
interest of most importance. Alternatives may be offered allowing all
options to be explored. The plan is presented and communicated to
the client in a report.
5. Implementing the financial planning recommendations is then
done by agreeing on who is responsible for the next steps. This
would include the selection of products and future services for the
implementation to take place.
6. The last step is to agree to the monitoring of the financial plan.
This may include a follow-up of the implementation of the
financial plan as well as any required adjustments to the plan.
Before any engagement is undertaken you the client have the
right to know how the planner is compensated for his services
and if there are any areas where there could be a conflict of interest
between the planner and the recommendations he is making.
This firm's compensation is fee based. No compensation is received
for any financial products recommended.
Before the start of any financial planning undertaking, a written agreement
is signed by you the client and myself.
WHAT YOU ARE BUYING IN ADDITION TO FINANCIAL PLANNING SERVICES IS
"PEACE OF MIND". Think of it as a checkup of your financial situation. This may
be just as important as your physical health.