As a provider of financial services, new clients share their financial concerns with us. Some examples include preparing for retirement, getting a better handle on finances, and dissatisfaction with investment returns and the amount of taxes they pay. After carefully listening, I often say, “I don’t want to put words in your mouth, but it sounds like you want a plan.” The response, often said with a hint of excitement and relief, is “Yes, that’s what I need, a plan.”
People instinctively know the absence of a plan can lead to subpar results. Most of us wouldn’t consider undertaking major projects like a family vacation or building a home without a plan. Plans don’t leave the outcome to chance. Instead, a plan provides the steps forward so you can progress effectively and with confidence. With a plan, you know the end game. That way, if you veer off course, you can adjust and get back on track. A successful outcome is more likely with a plan.
Despite this knowledge, many people never get around to creating a financial plan to protect and grow their family’s wealth. That’s a shame because the benefits of planning also apply here. Implementing a comprehensive, actionable financial plan can significantly improve your financial outcomes. Just as importantly, a plan can instill security, confidence and financial peace of mind. With your finances in tip-top shape, you can be confident about where you are headed and how you will get there.
It’s important to note that hiring an accountant to handle your taxes, an investment advisor to manage your investments, and a lawyer to draft wills and other estate documents does not add up to a financial plan. These steps are a good start, but an incomplete solution.
If you’re not entirely satisfied with the current management of your finances, a financial plan may be the solution. Research from the Certified Board of Financial Planners Board of Planners shows that people with a financial plan are three times more likely to be satisfied with their personal finances, and two times more likely to be living comfortably (2012 Household Financial Planning Survey). What’s more, long-term financial goal-setting is also correlated with greater satisfaction with personal finances, according to a 2016 study of Financial Capability in the U.S. by FINRA’s Investor Education Foundation.
What are the specific benefits of a well-designed financial plan?
A plan will identify opportunities for improvement such as reduced taxes, improved investment results and cost-effective insurance. With all of your financial parts organized in one place, control over your wealth will improve. You will save time because a robust plan succinctly outlines improvement recommendations complete with accountabilities and due dates. A plan promotes better financial decision-making because it provides a baseline against which decisions can be made. Most importantly, a plan will turn a fuzzy view of your financial future into crystal clear goals with incremental steps to achieve them, complete with periodic progress check-ins and course corrections, as needed.
The financial uneasiness of our new clients is often apparent. Sometimes, there is apparent tension between what they say and their body language. After we have worked with clients for a while, we find their demeanor becomes more relaxed and worry free. Armed with a plan, they have a healthier perspective on the gyrations of their personal situation, the general economy and the financial markets. Several clients have told us, “You changed our lives.”
How can you get help preparing a financial plan? Several solutions are available online. If you want professional guidance, a good starting point is our website. Go to www.partnersinwealth.com and click the link on our home page to request our Insiders Definitive Guide to Finding your Ideal Wealth Manager.