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What Is A Financial Plan, Really?

What is a financial plan, really?

What is a financial plan, really?

Financial planning is a broad concept that encompasses a lot of moving parts.  We see great value for our clients in having a financial plan, and updating it periodically.  We’ll look at the benefits to you of having P&A do a financial plan for you, as well as some of the common misperceptions about what the process entails.  First, the benefits:

  • Establish priorities– A financial plan will help you to define not only your financial goals, but your life goals.  What do you want to accomplish and how do you get there?
  • Gain an accountability partner– Research shows when you create goals and share them with someone else, you are much more likely to reach those goals.  Consider P&A a partner on your financial journey.  We are here to encourage you along the way and to help with course corrections when and if needed.
  • Identify blind spots– Chances are you haven’t thought of everything when it comes to your financial life.  Is your money working as hard for you as it could be?  Are you tax-efficient or do you leave money on the table?  How will you recreate an income stream in retirement that keeps up with inflation?
  • Peace of mind– The majority of clients who go through our planning process come away with validation that their financial efforts are paying off.
  • Perspective on risk– Going through the planning process helps you to understand the level of risk necessary in order achieve your goals.  When known, this helps to keep your eyes on the prize and to ride out short term market disruptions that will occur.

Some common misperceptions about financial plans

  • The process is complex and labor-intensive– Quite the contrary.  A simple two-page fact finder can launch the P&A planning process.  From there, we will dig deeper where we need to in order to produce an accurate assessment of where you stand and what your future path looks like.  It’s our goal to make the planning process as simple and pain-free for our clients as possible.
  • They’re mainly for people who are nearing retirement– In fact, they’re important for people at any stage of their career, but especially those who are just starting out.  What better way to ensure financial success than to begin with a plan and take advantage of time on your side?
  • They result in the client being sold some financial product– The financial planning industry traces its roots to the insurance profession.  An insurance salesman would have their clients do a plan, and surprise, it would show some kind of void that could only be filled by insurance.  Just to be clear, at the end of the P&A planning process you won’t be sold some financial product.  That’s not our business model.  Just straightforward advice that puts our clients’ best interests first.
  • They’re costly– In fact, we don’t charge our investment management clients for a financial plan.  The reason is twofold.  First, we believe the value a plan delivers to you is worth much more than we could ever charge for the service.  Secondly, by not charging you for planning, it’s our hope you will do more of it, not less.

A couple of years ago, we did a client survey and the results spoke volumes about the power of the financial plan.  84% of those who had gone through the P&A planning process were comfortable that they were on track to meet their financial goals.  If you’re interested in enlisting our help with setting goals and working toward your financial freedom point, please give us a call or send us an email. – Jon Sevenker


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