BY STEVE J. HIPSLEY, CFP
Do you picture yourself owning a new home,
starting a business, or retiring comfortably?
These are a few of the financial goals that may
be important to you, and each comes with a price
tag attached.
That’s where financial planning comes in.
Financial planning is a process that can help
you target your goals by evaluating your whole
financial picture, then outlining strategies that
are tailored to your individual needs and available
resources.
Why is financial planning important? A comprehensive
financial plan serves as a framework
for organizing the pieces of your financial picture.
With a financial plan in place, you’ll be better able
to focus on your goals and understand what it will
take to reach them.
One of the main benefits of having a financial
plan is that it can help you balance competing
financial priorities. A financial plan will clearly
show you how your financial goals are related–for
example, how saving for your children’s college
education might impact your ability to save for
retirement.
Then you can use the information you’ve
gleaned to decide how to prioritize your goals,
implement specific strategies, and choose suitable
products or services. Best of all, you’ll know
that your financial life is headed in the right
direction.
Creating and implementing a comprehensive
financial plan generally involves working with
financial professionals to:
• Develop a clear picture of your current
financial situation by reviewing your income,
assets, and liabilities, and evaluating your insurance
coverage, your investment portfolio, your
tax exposure, and your estate plan.
• Establish and prioritize financial goals and
time frames for achieving these goals.
• Implement strategies that address your
current financial weaknesses and build on your
financial strengths.
• Choose specific products and services that
are tailored to help meet your financial objectives.
• Monitor your plan, making adjustments as
your goals, time frames, or circumstances change.
The financial planning process can involve a
number of professionals.
Financial planners typically play a central role
in the process, focusing on your overall financial
plan, and often coordinating the activities of other
professionals who have expertise in specific areas.
Accountants or tax attorneys provide advice
on federal and state tax issues.
Estate planning attorneys help you plan your
estate and give advice on transferring and managing
your assets before and after your death. Insurance
professionals evaluate insurance needs and
recommend appropriate products and strategies.
Investment advisors provide advice about
investment options and asset allocation, and can
help you plan a strategy to manage your investment
portfolio.
The most important member of the team, however,
is you. Your needs and objectives drive the
team, and once you’ve carefully considered any
recommendations, all decisions lie in your hands.
You can, if you have enough time and knowledge,
but developing a comprehensive financial
plan may require expertise in several areas. A
financial professional can give you objective information
and help you weigh your alternatives,
saving you time and ensuring that all angles of
your financial picture are covered.
The financial planning process doesn’t end
once your initial plan has been created. Your
plan should generally be reviewed at least once
a year to make sure that it’s up-to-date. It’s also
possible that you’ll need to modify your plan due
to changes in your personal circumstances or the
economy. Here are some of the events that might
trigger a review of your financial plan:
Your goals or time horizons change when:
• You experience a life-changing event such as
marriage, the birth of a child, health problems,
or a job loss.
• You have a specific or immediate financial
planning need (e.g., drafting a will, managing a
distribution from a retirement account, paying
long-term care expenses).
• Your income or expenses substantially increase
or decrease.
• Your portfolio hasn’t performed as expected.
• You’re affected by changes to the economy
or tax laws
Don’t wait until you’re in the midst of a
financial crisis before beginning the planning
process. The sooner you start, the more options
you may have.
Each financial plan is tailored to the needs of
the individual, so how complicated the process
will be depends on your individual circumstances.
But no matter what type of help you need, a financial
professional will work hard to make the
process as easy as possible, and will gladly answer
all of your questions.
A financial professional is trained to listen to
your concerns, identify any underlying issues, and
help you find common ground.
Financial planning professionals make recommendations,
not decisions. You retain control
over your finances. Recommendations will be
based on your needs, values, goals, and time
frames. You decide which recommendations to
follow, then work with a financial professional
to implement them.
Hipsley is president of Reinhart Champlain
Wealth Management LLC in Saratoga
Springs.