Monday, May 10, 2010

What is a financial plan and how do I get one?

Financial Planning is a general term used by most professional advisors – but not all financial plans are created equal … and they shouldn’t be. Your financial plan should be a perfect fit for your life as it is today, easily and quickly adaptable to the constant changes life throws at you, and always focused on achieving your longer term life goals. That’s a big – and important – deal.

So, the first question you must ask yourself is, Do I need a financial plan? The simple answer is yes – if you have an income, a family (or the hopes of one), dreams of a comfortable retirement, and any of the dozens of other financially-rooted reasons that are unique to you.

The next question is, What are the elements of a sound financial plan? There are two answers to that question: the general and the specific.

In general, every financial plan should include: investment planning, cash flow planning, education planning, estate planning, insurance planning, retirement planning, and income tax planning.

The key to a successful financial plan is making sure that each of those elements is made specific to you and your needs – and to do that, a competent professional advisor will take you through this six step planning process:


1. Goal setting – to determine and prioritize your goals and concerns.

2. Data gathering – assembling the relevant financial information to understand your current financial situation.

3. Financial analysis
– using your current and projected financial situation to identify and answer questions like: “How much tax must I pay?” How can my taxes be reduced?” Will I have enough income to cover my expenses during retirement?” “How can I better meet my income needs?” “How can I protect my family and income if I should become disabled or die unexpectedly?”

4. Plan formulation and recommendations
– discussing, reviewing and deciding on various alternatives and solutions for achieving your financial goals and improving your overall financial life.

5. Plan implementation
– providing you with a written report summarizing the steps you need to take to make your plan work.

6. Monitoring and plan review
– financial planning is not a one-time event. You should review your plan at least annually or when major life events occur.

Comprehensive financial planning is complex and necessary. To be sure you get exactly the right one for your situation, it’s a good idea to put a professional advisor on your financial team – an advisor with the qualifications, tools and track record you can count on to develop a personalized
financial plan that will the job for you – today and tomorrow.

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