When beginning a financial planning journey for the first time (or even starting anew with a different financial planner) one of the main things you should look for in who you work with is their financial planning process. This is one of the 3 P’s of hiring a financial planner I suggest you should never go without! While every person or couple is extremely unique in their needs and desires, the areas we cover together to develop their financial plan are always the same. These 7 areas we cover will be explored over the course of a year:
- Financial Foundation
- The first area we cover when reviewing your financial plan is your financial foundation. This includes areas like your current spending and budget, any debt that needs to be addressed, children’s college education, and large purchases like cars or homes. There is a reason we call this area your Foundation. The decisions you make for these financial factors help shape the rest of your goals. It is so important to understand your current spending and how it relates to your short- and long-term goals. We’ll review all these areas together and make sure you are making the most of your income by aligning your budget with your personal values.
- Second we will conduct an insurance review. Insurance recommendations vary, but usually include Term Life Insurance, Auto Insurance, Renters or Homeowners Insurance, Health Insurance, Long-Term Disability Insurance, Long-Term Care Insurance, Identity Theft Insurance, and an Umbrella Policy. We will review your coverage in these areas and any other areas that might be relevant to you. We will make sure you have the right amount of coverage (not too little, but also not too much! Just like Goldilocks) and also make sure the premiums you are paying are reasonable for the coverage you need. I do not sell insurance myself, so you are welcome to utilize the insurance provider of your choice. Because I do not sell insurance products, you can also trust that my recommendations for you aren’t influenced by commissions, pressures for quotas, or anything other than your needs.
- Everyone’s favorite topic to hate! For our review of your taxes, we will take a look at your prior tax returns for any areas of improvement. We will also discuss the tax efficiency of your investment accounts, explore options for tax deferred accounts, and do our best to optimize your tax efficiency. I am not a licensed tax preparer, and all tax based recommendations should be reviewed with your preferred tax professional.
- In this topic, first we work on education. I will meet you where you are to teach you the basics about investing. It is extremely important to me that you understand all your investments in full. We start with an emphasis on understanding BEFORE investing. We will also evaluate your risk tolerance and discuss the types of investments that are right for you. You will have time to ask any and every question you’ve always wanted to ask before we move forward in investing your money. Once you feel confident about what you’ve learned, I will recommend investments specific to your needs and risk willingness, and we will implement those investments at your pace and comfort level.
- This one is the big kahuna for most people. It is such a big question mark! Will I have enough money to make it? What does making it even mean? How early can I retire? And how much fun can I have when I get there? (and along the way too!) We will sit down together and discuss your dream retirement. What does retirement mean to you? Everyone answers this question differently. Some people have big travel dreams, some people just want to have more flexibility in their schedule doing work they love, others want to make a large purchase such as land to create a family legacy. No vision is wrong, and the possibilities are limitless. We will discuss what YOUR vision of perfect is, assign numbers to understand what it takes to accomplish your goal, adjust if necessary and make a plan together to achieve your goals.
- This section of your financial plan is critical. This is the area where you protect all of the hard work you are doing. Together we will discuss one of life’s least comfortable topics—What if something bad happens? While this subject is no fun to discuss, I think most people do agree it is important to protect the people we love in the event of our passing or injury. I will walk with you to help you develop your plan. While I am not an attorney and cannot draft your estate documents for you, I can help you think through your options in a low stress environment. We will explore what documents could be right for your situation for when you talk with an attorney, potential need for insurance or specific account titling, beneficiaries, and setting up your assets to minimize chaos and conflict in a stressful time for your family.
- The last topic we cover together is the more fun side of your end of life planning – The legacy you will leave behind! After you’ve moved through your working years and enjoyed your retirement, the next big question is what do you want to leave behind? Some people want to ensure financial security for their children or grandchildren, some want to leave large charitable gifts to a cause they have supported in life. Even if you do not have lofty goals, leaving a legacy for your family of a tidy estate with no debt has a major positive impact. We will work together to make sure the legacy you want to leave behind is in place, so you can rest with peace of mind.
You’re probably thinking “Wow, that is a LOT to cover”, and you’d be right. The first time you work through a financial plan is a big commitment and takes quite a bit of thought and self-reflection. Just like anything else though, it does get easier with time. Our first year of working together follows a schedule to make sure we cover all these topics in depth together. Every year after that, we will review the plan you already have in place to see what still applies and edit what has changed. Some years will require more changes and edits than others, and your financial plan will grow and morph with you over time. It is my absolute pleasure to walk with all my clients on this journey. Learning what makes your story unique, hearing your special goals, and helping you work toward them is what makes my job worth doing.