Most people who contact me about financial planning have never worked with a planner before – they understand that they need help organizing their financial lives so that they can plot a more effective path to achieve their goals, but they just don’t have any experience talking with someone in depth about them. Since it can be difficult to conceptualize, I wanted to spend some time sharing details about what comprehensive financial planning means, and how it can impact your life in a meaningful way.
Comprehensive financial planning goes beyond the numbers
For most people, the thought of sitting down to “plan” their finances can evoke anxiety and seem overwhelming, in part because it requires a specific type of mathematical and linear thinking, and moreover detailed ancillary knowledge about taxes, real estate, investments, and probability modelling. However, in reality comprehensive financial planning means first taking a step back from all the details, and starting with a vision, not with numbers.
Some of our first, and most important, conversations – of which there will be many over the course of an engagement – focus on your goals and values – not about what you have, or what you want to have, but about the kind of life you want to lead, and the diverse intersections with money that can shape such a life.
With the clarity around purpose and intentions that arises from these discussions, we then focus on mapping out the most effective strategies for realizing your goals. Instead of being a purely mathematical exercise, this highly personal approach to financial planning is intended to turn anxiety into confidence, provide perspective, and create a sense of freedom.
What does comprehensive financial planning look like?
Once we have clarity around your values and goals, we begin to dive into the numbers. In general, there are essentially two separate, yet sequential processes that comprise comprehensive financial planning. The first starts with an assessment of where you are: what assets and liabilities you have, how your cash flow works, how your investment portfolio is structured, what your risk tolerance and capacity is, what kinds of estate plan and insurance coverage you have. This entails an educational component, to be sure – not everyone understands all these pieces, or how they work together. Starting with such a detailed map helps illuminate areas of potential concern that you may not have been aware of and which could be barriers to realizing your goals.
Next, once we have such a map, we return to your goals and look at them more deeply, which will allow for the technical analysis that will follow. What kind of education do you want to provide for your children? How much will that cost? What kind of a lifestyle do you want in retirement? How much will that cost?
Now we can begin to connect the dots, from where you are now on the map, to where you want to be in the future – and start to look at the steps that will be required to get you from one place to the other and increase your chances of success in realizing your dreams.
As part of the process, I’ll analyze your existing portfolio through the lens of your personal goals, and demonstrate how specific investment strategies will impact your portfolio’s value over time, thereby affecting the likelihood of success. We’ll also pinpoint estate planning strategies to achieve your goals beyond your lifetime, and protect your assets with relevant insurance coverage. As a key component of every step, I specialize in helping my clients navigate the sometimes tricky waters of complex tax planning.
Together, we’ll discuss how your decisions translate into implementation strategies. When trade-offs are required, I’ll walk you through the different options and key implications so you can make the best possible decisions for your family.
How a financial advisor can keep your plan on track
As I mentioned earlier, there are really two separate processes that comprise comprehensive financial planning. Above, I outlined the steps involved in the creation of an initial plan, which generally takes 2-3 months to complete. But the real value in financial planning lies beyond that point: namely, in the additional support to implement the plan – to make sure all the strategies are followed, in the proper timeline – and the ongoing support to monitor the plan, adjusting as needed over time, and addressing any new challenges as they arise – whether they are specific to your family circumstances, or related to changing tax and regulatory laws, for example.
In short, there is real value in the ongoing planning process, which does not stop with the plan creation itself.
The investment you make in the process of clarifying your goals and committing to a detailed financial plan with strategies to achieve them is a solid foundation to guide future financial decision making. But not everyone has the time, discipline and knowledge to be able to continue to evolve their plans as their life inevitably changes, with new jobs, new children, new challenges, new opportunities.
For those of you who don’t have such time and expertise, we provide ongoing support so that you always have a trusted advisor in your corner to call on, ensuring your plan evolves as your own life changes. At Soaring Wealth, we specialize in ensuring that our clients avoid financial derailment by providing realistic options and reasoned guidance to help you navigate the changes that life presents to you.
How a financial plan can create freedom
Around Thanksgiving 2015, just after I moved back to Vermont from Switzerland, I heard a dharma talk by Tara Brach, and one particular quote has stuck with me – “freedom is knowing that you have enough.” Financial planning allows me to help my clients develop a clear understanding of what they have, what their deep dreams are, and develop an actionable plan to achieve them. There is freedom to be found in such knowledge.
I invite you to book an introductory consultation to talk further.
