So, you’ve taken time choosing a financial advisor who seems trustworthy and competent. Now what? It might be tempting to leave everything to them—after all, they’re the professionals! However, a financial plan that aligns perfectly with your goals requires collaboration. We always say, no one cares more about your money than you do! So it’s critical that you understand the basic fundamentals and investment methodology!
With over 14 years of experience and thousands of clients, we’ve found that clients tend to feel much more confident and secure in the resilience of their plans if they actively engage in the financial planning process. Additionally, they are also unrattled and remain calm as markets lift or fall.
Education and coaching around your money and financial markets makes all the difference. While this creates more work for our firm as we stay committed to client education and meeting regularly, we won’t have it any other way.
An educated investor is a confident investor – we are clear on that and committed to our clients having an enjoyable experience around money and investments. A quick glance at any of the google reviews at any of our 5 offices, will show what our clients are left with as they work with their financial advisors and our team.
Your advisor needs a lot of information to fine-tune your financial plan, including understanding your short-term needs, long-term aspirations, risk tolerance, and even personal values. Actively participating in the planning process will give your advisor the necessary insights to tailor the plan specifically for you.
This collaboration will also help you better understand the plan—making it truly yours instead of a step-by-step you have to follow mindlessly. Read this guide for a thorough explainer of the process so you can take part confidently!
6 Steps in Creating a Financial Plan
Your financial plan is essential. It’s the roadmap guiding you toward your financial goals and ensuring a secure future. However, a robust plan doesn’t come from nowhere! Here are the steps you have to take to achieve that result.
Finding The Right Advisor
Your financial advisor should be someone who possesses the necessary expertise and credentials and should understand your aspirations. Start by researching potential advisors through reputable sources. Look to professional associations, referrals from friends and family, or online platforms.
Once you’ve compiled a list of potential advisors, schedule initial meetings to assess your compatibility. Assuming you’re okay with the fee structure, communication style, etc., it’s time to look at the connection.
The best approach is to get to know them. Give particular attention to how well they listen to your concerns and whether they take the time to understand your circumstances. After meeting them, trust your instincts and pick the one who instills the most confidence. You’re starting a long-term relationship. Make sure it’s built on trust and mutual respect.
Assessing Your Current Financial Situation
Once you have an advisor, the next step is to build a clear understanding of your current finances. This process involves gathering the following:
- Income
- Expenses
- Assets
- Liabilities
- Insurance coverage
- Existing investments
Your advisor will likely provide you with a comprehensive questionnaire or checklist to collect this data.
During this process, you have to be transparent and forthcoming with your financial information. This is not the time to exaggerate your wealth or downplay your spending. The more accurate and detailed your input, the better equipped your advisor will be to develop an effective plan.
Defining Your Financial Goals
By this point, you both now have an understanding of your current financial situation. It’s time to define your goals. These may include short-term objectives, such as building an emergency fund or purchasing property, as well as long-term goals, such as retirement planning or leaving a legacy for future generations.
You have to make SMART financial goals—specific, measurable, achievable, relevant, and time-bound. You can’t just say your goal is to “achieve wealth” or something vague like that.
This framework will help you clarify your priorities and ensure your goals are realistic and attainable. Your advisor can help you make unclear goals like the one above more concrete and give actionable steps considering factors such as your age, income, risk tolerance, and time horizon.
Analyzing Potential Strategies
Have you ever heard the saying, “Don’t put all your eggs in one basket? This age-old adage is helpful when it comes to your financial plan. Once you have defined goals, your advisor will analyze potential strategies to help you achieve them.
This process may involve developing a diversified investment portfolio, implementing tax-efficient strategies, optimizing retirement saving vehicles, or exploring insurance solutions to mitigate risk.
During this phase, your advisor will consider various factors, including your risk tolerance, time horizon, liquidity needs, and tax situation. They will evaluate the potential impact of market shifts and other external factors on your investment returns and financial security.
Having these multiple paths enhances your chances of achieving your goals while minimizing risk.
Implementing Your Financial Plan
Once you’ve agreed on a financial plan, implement it effectively. Your advisor may ask you to open new investment accounts or reallocate existing assets based on your discussions. They may also ask you to purchase insurance policies or set up automatic contributions to retirement savings accounts, depending on your goal.
This step can involve a mountain of paperwork, but you don’t need to feel overwhelmed! Your advisor will guide you through each step of the implementation and ensure your plan gets executed in accordance with your objectives. They will also monitor your plan’s progress regularly and make adjustments as needed.
Monitoring And Evaluating Your Plan
Even the most well-thought-out financial plan is sure to encounter some unforeseen changes! Your plan is an ongoing process that requires regular monitoring and review. Remember, planes take off every hour with flight plans that almost alway change along the way.
Your financial situation and goals may evolve due to changes in your circumstances, market conditions, or regulatory environment. You may change careers or experience employment changes at the hand of your employer. A number of factors change for everyone, often!
Even in financial planning specifically, our business is all about changes. For example, a new law might close a tax-efficient investment vehicle you were using. Or you might have a kid and want to switch your goal to save for their tuition fees. Alternatively, better options may open that weren’t available when you were first making your plan. Your advisor will schedule periodic reviews to adjust to such events.
In our experience, great financial advisors are meeting with their clients regularly to understand and update variables that may be changing around your financial world. Tencap Wealth Coaching advisors are holding reviews and assessing how things are going and give you the opportunity to make any necessary realignments. If, for any reason, you experience a change in your financial situation, investment strategy, or risk tolerance, you can make proactive decisions to optimize your financial outcomes.
The Blueprint for Success
You are both the architect and builder in the blueprint of financial success. It might be daunting to think that you have to solve it on your own, but fortunately, you don’t! Your financial advisor can help you navigate every step of your financial journey, from assessment to monitoring.
This week we met with a potential client who said, “why don’t I just do this myself and save myself an expense.” That’s a very fair question. There are many factors to that question, but we asked him to consider the opportunity cost of trying to take advantage of every financial opportunity and strategy that may be available to him and his family in the next 3-5 years alone, let alone during retirement.
It’s a big job to make sure that your investments are working productively and efficiently while not taking on any more risk than is needed. It’s a big job to monitor your tax strategy to ensure you are not overpaying your taxes. It’s a big job to ensure your estate plan is complete, solvent and well integrated into your finances. It’s a big job to review every insurance policy you own to make sure you have intelligent/responsible coverage. It’s a big job to know which account type to fund or when to do a ROTH conversion, or why you should do one.
Through collaboration with your advisor and diligent time spent, you can have a concrete plan for a secure and prosperous future. Stay committed to monitoring, adjusting, and evolving your plan as needed with the help of a trusted professional, you can maximize your retirement savings and be financially independent at the age of your choosing.
You can do it, we can help.
The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Author Bio
Nick Carrigan trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.
