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Chances are, your income is going up but it's becoming harder to save. The tax laws seem unnecessarily complicated, investments look riskier than ever and you're tired of sales pitches over the phone and bankers who only recommend their own CDs. And when you read about the costs of a college education or a comfortable retirement, the numbers look bigger than the national debt.
In a world crowded with new investments, changing tax laws, rapidly evolving insurance products and volatile economic cycles, more and more people are looking for clear direction in their financial lives. Unfortunately, the busier and more successful we are, the less time we have to sort out our financial affairs.
Is there a solution?
Yes. Out of this increasingly complicated financial environment has come a new breed of professional: the financial planner. A planner's primary goal is to help you - and others like you - enjoy a comfortable lifestyle today and still look forward to a financially secure future.
Financial planners offer something you may not be able to get from the traditional stockbroker, banker, accountant or insurance agent - a way to consolidate all aspects of your financial life into one coordinated plan, so that every investment and activity can be viewed in the context of specific financial goals. In the process, you gain a new sense of control over your financial life.
Setting Goals and Answering Questions
You start the process by making basic decisions about your current needs and financial objectives.
Helping you discover your goals, clarify your objectives and set priorities is the first job of a financial planner - and it is the most important, since everything else will rest upon this foundation. Often, people are surprised to discover that what they believed was an end in itself - reducing taxes, for example - is really a means to a larger and more specific goal - building a substantial estate or accumulating sufficient retirement income.
Then the fact-gathering process will cover your investment portfolio, if any, review your insurance contracts, examine the benefit plan provided by your company, and analyze the amount and sources of income and monthly household expenditures. Your planner will discuss your financial goals, funding a child's education, your concern with risk and liquidity, and your desire to maintain a certain standard of living for your family in the event of death or disability.
One of the most common questions asked early in the planning process is: 'Will I be able to afford to retire?' This can be broken down into several smaller issues. How much, in today's dollars, will you need to spend during your retirement years? When do you plan to retire? What do you expect the inflation rate to be, on average, between now and the time you retire?
Other issues may be more or less complicated. Do you plan to move into a larger home in the future? Do you plan to pay for the college education of one or more children? If so, what kind of school will they attend? What investment alternatives are you most comfortable with, and which would you prefer to avoid? Do you want to leave a substantial estate to your heirs, or to consume your assets during the retirement years?
The Financial Plan
Depending on your individual needs and wishes, your financial planner may render advice orally, in advisory letters on specific topics over a period of months or years, or in a comprehensive written financial plan that may be a few or several hundred pages long. However it is packaged and delivered, during your relationship with your planner, the planning process will include the following service as needed:
A plan may range from 50 to 150 pages, based on the complexity of circumstances and the degree of explanation and detail:
· Cash Flow Budgeting Analysis
· Capital Management (debt and investment portfolios)
· Estate Planning and Liquidity Analysis
· Income Tax Planning
· Retirement (forecasting benefits, costs and options)
· Insurance Needs (life, property, casualty and disability)
· Educational Funding Requirements
· Employee Benefit Analysis (coordinate personal holdings)
· Closely-held Business Analysis
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