The Need for Financial Planning


money-treeFinancial planning offers a coordinated and comprehensive approach to helping you achieve your personal and reasonable financial goals. Building, managing and preserving wealth is not an easy task. Maybe you have recently retired and are concerned about outliving your nest egg. Perhaps you are a baby boomer trying to plan for a secure retirement. Maybe you are part of the “sandwich generation”, caring for your own children at home while also caring for the needs of aging parents.

Maybe you are recently widowed or divorced with all of the complications that these life challenges bring. Maybe you have accumulated substantial wealth and want to protect your assets from lawsuits, spendthrift relatives, divorce or other potential threats not only to yourself but also to your heirs. Selecting appropriate investments is simply one ingredient in the recipe for an effective financial plan that should also include retirement and estate planning. An experienced financial planning team should help you to:

Identify your goals

  • Understand your current situation
  • Develop a plan that addresses your goals with your risk tolerance in mind
  • Implement and monitor the financial plan
  • If you are already retired, the following may be very real risks that you are currently facing.

5 Major Risks Affecting Retirement Income

  • Longevity Risk – Outliving your money
  • Inflation Risk- Loss of purchasing power
  • Asset Allocation Risk – Surviving market declines while maintaining potential for upside appreciation
  • Excessive Withdrawal Risk – Depleting your asset base prematurely
  • Health Care Expense Risk – Health care costs because of how quickly they can shrink your assets
  • Goals

Everyone has unique aspirations, hopes, dreams and motivations that guide their daily life. Those who identify their goals early in life possess a distinct advantage in achieving these goals. At the core of proper financial planning is the prioritization of meaningful personal and reasonable financial goals.

Are your goals clear and realistic? Do you know exactly what you want to accomplish and why? What are some of the obstacles that may prevent you from reaching your goals? What is your time horizon for reaching your goals? Once your goal is met, what benefits can you expect? The answers to these questions will provide the foundation that anchors your financial planning strategies. Since the foundation is the most vital element in any structure, identifying your goals is the first step in the financial planning process.

Financial Profile

Fact-finding is a crucial step in the financial planning process. Through fact-finding allows the financial planning team to identify and prioritize your goals, as well as analyze your assets and liabilities. Prior to recommending a course of action, a financial profile must be constructed that reflects your net worth, income needs, lifestyle, tax situation*, debt obligations, risk tolerance and investment objectives. A financial profile should also include a review of your current investments, retirement accounts, living expenses, insurance contracts and cash flow. Fact-finding is the starting point in the financial planning process. By identifying your goals and analyzing your financial profile, a plan should then be developed and implemented.

The Financial Plan

Using the information gathered during the fact finding process, a customized financial plan should be developed for you. The financial plan should represent a series of calculated and deliberate steps that must be taken in order to help you achieve your personal and financial goals. In the financial plan, every issue that is pertinent to your desired objectives should be addressed – projected earnings, company benefits, retirement planning, investment analysis, insurance coverage, college planning, debt management and estate* planning. All of these areas should be coordinated in a clear and concise format that would guide your financial decisions now and into the future.

A comprehensive financial plan should include a detailed analysis of:

Your Profile

  • Investment Objectives and Goals
  • Current Net Worth and Footnotes of all holdings
  • Asset Allocation and Liquidity Analysis
  • Cash Flow Requirements
  • Specific Investment Recommendations
  • Retirement Planning
  • Estate Planning Concepts
  • Estate Tax Liability Projections
  • Review of need for Life, Disability and Long-Term Care Insurance
  • In addition, the financial advisor should discuss and illustrate the benefits of tax-deferred* investments and the need for proper diversification.


With the solid foundation of a detailed financial plan in place, the financial advisor would be prepared to implement the recommendations and strategies outlined in the plan. Immediate measures to be taken may include repositioning of assets, satisfying debt obligations, meeting cash flow needs, making new securities investments, applying for insurance and executing estate-planning documents.

As you progress, your financial plan should evolve to accommodate for changes in the economic climate and your personal situation. Periodic updates are an important aspect of this comprehensive approach. As tax* laws change and the financial markets become increasingly complicated, a competent financial advisor with detailed knowledge of your unique needs would able to answer questions or apprise you of appropriate opportunities that will help in your quest for financial peace of mind.