We were able to share some insights from working with clients through divorce and career changes in this article in Edge magazine: Getting by with less: Financial planning is key for women, as gender gap often grows in retirement
There is much more to financial planning than standing by watching the market go up and down every day. In fact, if we are keeping our financial house in order, then the market does not seem so scary.
Research tells us that over time, if we properly allocate our investments to align with our goals and timelines, keep our fees low and stick with our strategy, the market is still a good place to put our money. It may be a not-so-thrilling roller coaster ride for the faint of heart these days. But even the faint will not fare well over time by resorting to cash or hiding it under the mattress if they want to keep pace with inflation.
Financial planning is a process – an ever-changing one. We can’t “set it and forget it”. It is a balancing act. There are competing financial demands, needs, and wants that must be addressed, strategically worked into a plan, and then monitored and reevaluated periodically.
This is why financial planning is necessary and never boring. It is essential for every household to take care of the family, protect against the unexpected, and prepare for the future.
Think of a financial plan like a house. A lot of preparation and hard work go into building a house. The foundation is critical; the framework and roof make the house sturdy and prevent leaks; and the details make it enjoyable. However, even after those last details are complete, you don’t move in and never concern yourself with your house again. Life happens – the family grows, needs change, repairs must be made. Life is organic – rarely does anything stay the same and not require an update or revision.
Let’s compare the foundation to cash flow, an emergency fund, and staying or getting out of debt. These are fundamentals that everyone needs to get in place. It is impossible to plan if you do not know how much money is coming in and going out. Whether you are single or a family of eight, it is good to begin with an accurate picture of income and expenses, as well as a balance sheet illustrating what you own and what you owe. An emergency fund would then consist of at least 3-6 months of your expenses, including fixed costs as well as variable ones that happen monthly. Establishing this emergency cushion while digging out of debt helps build the habit of saving and therefore preventing future continued debt. We may not be able change the direction of the market, but we can change the direction we are headed by fine tuning the fundamentals: wisely managing debt, investing prudently, and freeing up cash flow to accomplish our savings objectives.
Secondly, the framework and roof include insurance planning, estate planning, savings for goals, and retirement and education funding. You’ll need insurance to protect everything that has the potential for financial harm: your car, home, health and life. Having estate planning documents in place is equally important due to their huge impact on how health and financial decisions are made, guardianship, wealth preservation, beneficiaries, and end of life directives.
As fee-only financial planners, we do not sell insurance or draft estate documents, but we do look for holes in risk management and your estate plan to give advice that fits a comprehensive plan for your and/or your family’s needs.
Another part of the framework, savings, can be seen as different buckets assigned to short, medium and long-term goals. How you invest these buckets of money depends on the time horizon for your unique goals. How to allocate between them and how much risk to assume helps determine the appropriate investment strategy. If you have decades before your newborn goes to college or before you retire, you can take on more risk. Part of the financial planning process is balancing your goals so that one goal, such as college for children, does not highjack another goal, like your retirement. Then reviewing your accounts each year to see if they still match your goals – remembering that life is organic, and we must adapt.
Lastly, there are dreams and legacy planning for the finishing touches. The relationship between financial planner and client must be one of trust, transparency, and clarity. Only then can there be a cooperative effort to move past covering the necessities to what truly matters to you. Do you want to start a new business that you’ve been putting off? How about your desire to give to needs or purposes dear to your heart? Is there a place where you want to visit or invest a part of your life? How about the legacy you want to leave for family? Those finishing touches make your house a home; and enjoying your life is the fruit of your labor.
Imagine how it would feel to have the peace of mind of a plan in place, and options and choices available when life takes a detour.
Yes, the market may be turbulent, but there is plenty of financial planning to do while we ride the peaks and valleys. And with progress in other areas, it just may make the ride a little less frenzied.
Over 70 ½? Have a traditional IRA? Give to charities? We have 3 words for you:
Qualified Charitable Distributions.
Most people give because they are passionate about a cause or they want to make an impact for good, not for a financial incentive. Nonetheless, if you desire to give, why not do so with money that you must take out anyway. If you are fortunate enough to not need all your required minimum distributions for living expenses, or if you are planning to give out of your normal expenses, you can avoid income tax on your required withdrawal by donating your money directly to a qualifying charity.
Let’s review the rules for qualified charitable distributions:
· You must be 70 ½ or older to make a tax-free charitable contribution.
· You must give from your IRA subject to RMDs, not a 401k or similar type of retirement account. Inherited IRAs are eligible, but SIMPLE IRA and SEP plans are excluded.
· If you are age 70 ½ or older, you can transfer up to $100,000 per year directly to an eligible charity; if you file a joint tax return, your spouse can also contribute up to $100,000 for a total of $200,000 from retirement savings excluded from income tax treatment.
· The charity must be a 501(c)(3) organization.
· The gift must be transferred directly from the IRA by the IRA trustee to qualify. If you withdraw it and later donate it, it will not qualify for a tax-free qualified charitable distribution.
· You must make the contribution by December 31.
So, for a retired individual or couple that is 70 ½ or older, own an IRA subject to required minimum distributions, and want to donate to charity, a qualified charitable distribution can be an avenue to preserve an income-tax-reducing charitable deduction under our new tax law.
Why make a qualified charitable distribution (QCD) instead of a normal charitable gift?
The new tax law will see fewer people taking advantage of itemized deductions such as mortgage interest and charitable gifts due to the doubling of the standard deduction possibly being a greater amount. If you do claim the standard deduction, you unfortunately lose any tax benefit from your charitable gift. With that said, a QCD will first count towards satisfying your required minimum distribution for that year.
Secondly, the distribution is excluded from your income, thereby reducing your taxes, which is a real benefit under the new tax law. And an additional bonus of using this strategy is it helps reduce your Adjusted Gross Income. This is important for several reasons. Your AGI determines the amount of your Medicare premiums in the following year, how much of your Social Security is subject to income taxes, and if you will be subject to the Net Investment Income Tax. Reducing your Adjusted Gross Income will help with each of these areas to lower overall income and/or taxes.
A few examples might help to clarify:
· Kathy, a single taxpayer, has reached 70.5 and is subject to a $25,000 RMD from her IRA for 2018. Her itemized deductions will not exceed $13,600 so she will use the standard deduction. She does not need all her RMD for living expenses and usually gives around $6,000 to charities each year. Kathy will make $6,000 in qualifying charitable gifts directly from her IRA and then take the rest of her RMD as a taxable distribution for herself. Kathy meets her full RMD requirement but will only owe tax on $19,000. She therefore receives the tax benefit of a $6,000 charitable deduction.
· John, a 71-year-old, has an IRA worth $750,000 as of December 31, 2017. His RMD for 2018 would be $28,302 based on the RMD table which requires the $750,000 to be divided by a factor of 26.5. John decides to use all his required minimum distribution to fund his charitable gifting. If John is in the 25% marginal tax bracket, he could avoid approximately $7,075 in income tax liability through giving.
As you can see, for an individual or couple who are in the 25% tax bracket, even a $1,000 donation can save $250 in taxes. You can also break up the donation and send it to multiple 501(c)(3) organizations. There are no IRS limitations on how many or how small the distributions may be to your favorite organizations if you provide the name, address, and other specific information for the charities.
There are other planning strategies for charitable gifts. It may be possible to bunch itemized expenses into one tax year to enable you to itemize in some tax years while claiming the standard deduction in other years. You may also be holding securities with large unrealized gains. By donating the securities to charity, you can benefit by avoiding capital gains, especially if you are able to itemize in that year.
A good plan can take your good intentions and create a winning strategy for you and your non-profit of choice!
So, you want to actively plan for your personal goals and for retirement, but you are not sure where to start? A good place to start is with your net worth. That one simple number is a pretty good indicator of financial health. The process of calculating it will likely tell you a lot about your financial strengths and weaknesses.
What is my net worth?
Your net worth is not about your annual income – in fact, income is not even a component of net worth. A large income and a big house do not equal a high net worth if that big house and everything in it is attached to a lot of debt. And just because an arbitrary target in assets is reached (we see $1 - $5 million being talked about a lot in articles…), does not mean you can retire or that your net worth is where it needs to be if your spending isn’t in line with the assets.
We have seen families with giant salaries struggle to pay their mortgage, and others with modest incomes have money to spare!
It’s not about what you make. It’s about what you keep.
Your net worth is the value of all your assets (what you own) minus the value of all your outstanding liabilities (what you owe).
If you were to ADD the value of your
· bank accounts
· investment accounts
· market value of your home
· cash value of life insurance policies (not the face amount!)
· auto and personal property
· business interests
and then SUBTRACT your
· car loans
· business loans
· student loans
· credit card balances
· any other amounts you owe
you will find your financial NET WORTH. This is an important number to you for a several reasons:
1) It gives you a real picture of your current financial condition. Whereas someone can possess many assets, if they owe as much or even more, then their financial situation is not as good as it appears. On the other hand, someone may not have a large value of assets, but if they have little to no liabilities, their financial situation may be better than it appears.
2) Your personal net worth gives a reference point for you to measure progress toward debt reduction, savings retirement goals, as well as other dreams and aspirations. It reveals to you whether your financial activities including working, saving, spending and borrowing are leading you in the right direction or not. It also shows you whether your financial choices such as your career path, owning a home, or your investments are actually producing the results you want.
3) Calculating your net worth periodically can motivate you to make wise financial decisions over time as you see your net worth improve. It also reveals trends in your monthly spending habits and their effect on your financial condition.
4) Determining your net worth forces you to calculate what your assets are worth in the current market if you were to liquidate them.
Net worth is one of the top three numbers you should keep track of, along with your monthly savings targets and your credit score.
Secondly, (and more importantly), how can I increase my net worth over time?
The simple answer is to change your monthly habits to spend less, pay down debt, and save more. Juggling financial priorities can be a challenge, but the effort to work through the process is worth it!
If you start building an emergency fund and keep liabilities stable, your net worth will increase. If you spend next year paying down student loans and/or credit cards, your net worth will go up again. Buying a house should, over time, increase what you own (but be careful to not view your house only as an investment). If your investment accounts increase in value, or you set aside money for retirement, your net worth will reflect that and increase as well.
If you’re a young person, realize that you might start with a negative net worth, especially if you just got an expensive degree that will significantly increase your income for years to come. This does not mean your financial situation is in bad shape. It just means you need to be patient as that net worth begins to become positive over time.
But don’t just buy more to have more. Save more to give yourself the freedom to pursue the goals that are important to you and your family and to become more financially independent. The importance of a financial planner is to help you analyze your financial condition, point you in the right direction, and keep you on track to meet those goals.
So, know your net worth! And schedule a visit with us to review how to increase it.
Student loans are becoming a more common planning topic that our clients want (and need) to address. This time of year seems to bring education back into focus. No one article can cover it all, but we’ve put together a few ideas that can help frame your decisions and options.
More Americans are attending college than ever before. According to the Georgetown Center on Education and the Workforce, 65% of jobs in America will require education beyond a high school diploma by 2020. But along with the increase in college graduates comes an increase in student loan debt. Student debt in America is almost $1.5 trillion which is greater than all outstanding revolving credit card debt. Over 44 million Americans hold this collective debt, which means about 1 in 4 adults are paying off student loans with the average borrower owing $37,172 with an average monthly payment of $351. Most would agree that a college education is still a good investment because of the earning potential over the course of a lifetime compared to the earning potential of someone without a degree or other certificate. However, the financial burden can be overwhelming and must be confronted head on.
So do we just not go to college? Well, it's not for everyone, and there is growing demand for trade and technical skills. Take time to evaluate all the available options for gaining skills, education, and experience!
If we do take the college route, do we just assume we (or our kids) will be stuck with this debt forever? No! There is life after student loans, and ways to minimize the burden.
Here are three recommendations concerning student loan debt.
1. Avoid and/or limit debt on the front end as much as possible. In May of this year, the College Board reported the average cost of a public college at $25,290/year and $50,900/year for private college. Students and parents should research the costs of college including tuition, housing, meal plans, transportation, and books. Then, before applying for loans, exhaust every grant and scholarship that you could possibly qualify for. It takes a lot of time to research and apply to all the various ones that are available, but it is well worth the effort.
Students can apply for merit-based scholarships (awarded for achievement) and need-based scholarships (for students who need financial assistance). There are also numerous ones you can find through the financial aid office of the college, the U.S. Department of Labor’s Free scholarship search tool, and online that are geared towards particular groups of people, occupations, background, etc. In addition, you must fill out the Free Application for Federal Student Aid (or FAFSA) to apply for any federal aid. This is required by nearly all higher education institutions and must be updated yearly. Some schools may require the College Board’s CSS Profile. Please pay close attention to how the calculations differ! They don’t look at things quite the same way (parental support in a divorce situation, for example).
After finding all sources of income through scholarships, grants, 529 plans, and working and saving towards college, then and only then consider loans. Student loans are a combination of Federal and private loan programs. There are federal subsidized loans for undergraduate students, federal unsubsidized loans for undergraduate and graduate students, and PLUS loans for graduate/professional students and for parents of dependent undergraduate students. A subsidized loan is needs-based, and the federal government pays the interest while the student is in college. For unsubsidized loans, interest begins accruing as soon as the loan is taken out. If you do not qualify for a subsidized loan, your next option is to choose between a federal unsubsidized and a private loan. Sometimes private loans can be cheaper depending on credit and individual circumstances, so look in to both options.
2. While in college, live frugally and if possible, begin to pay down the interest on student loans. College is a great time to learn to budget money. What better time to learn than when you are making possibly the lowest income you will ever earn? As a student, take advantage of free campus activities and free meals, using your student id for events and discounts from local providers. Think cost-effective when you consider housing choices, meal plans, entertainment and transportation.
And try to pay down your school loan. Often the interest that accrues on your loans while you are in college is capitalized once you graduate; therefore, the interest is added to your loan principal and interest is accruing on interest. So at least try to pay down the interest while you are in school or during the 6-9-month grace period after graduation before repayment begins. It will save you money in the long run!
A part-time job can go along way towards reducing what you will owe when you have completed school. Save automatically through employer withdrawals from your paycheck and take advantage of new mobile apps that will round up purchases and save the difference. You will have peace of mind, and the freedom to choose the job you want instead of choosing the one necessary to pay down debt.
3. After graduation, commit to paying off student loans systematically and not incurring additional debt. There are three scenarios you might want to compare to pay off the debt: prepayment, changing repayment plans, and loan consolidation. Loan consolidation can be a good strategy but not always. If you refinance Federal student loans into private loans, they can lose the advantages offered by the Federal Direct Consolidation Loan program which can include flexible payment plans and potential for forgiving the loans. This program combines multiple Federal student loans into one that is recalculated as the weighted average interest rate of all the student loans being consolidated, so it doesn’t really change the interest rate, but can change the repayment period. Through this program, a student loan borrower can qualify to use income-based repayment, pay as you earn, revised pay as you earn, and public student loan forgiveness, all of which have requirements. So even though you may be able to get a better rate through a private loan, you will permanently lose the availability of these programs.
Review your Federal loans to see if it would be wise to consolidate. The National Student Loan Data System shows the details of loans that are part of Federal programs. Review your private loans to see if it would be wise to refinance. Another good resource is StudentLoans.gov and you can find repayment estimator tools through the Department of Education.
If you have additional debt, start applying more towards the short-term, high-interest debts, such as credit cards, because these debts grow much more quickly than student loans with reasonable interest rates. Be diligent not to take on any more debt until all is paid off. Live for a while longer on a more frugal budget and it will pay dividends when you are debt free!
Seventy percent of graduates in 2016 carried student debt. You are not alone. You may want the help of a financial advisor to show you how to navigate all your options when it comes to balancing student debt, saving for a home, saving for retirement, and looking at a comprehensive plan to get you on track for your future!
We all know and have been told that we need to save for retirement. The IRS recognizes the need to save for retirement so much that they have created several tax-advantaged accounts such as the 401(k) and individual retirement accounts (IRAs). There are a lot of choices when it comes to retirement saving. The number of choices can sometimes intimidate us so that we are not sure which is the better choice for ourselves or our family. But waiting until we “have more time” or until we get to that “dream career” or until we move to that “next stage of life” can cost us big-time in lost earning years and compound interest. Now is the time to take specific steps to plan and save for the future.
For most people, especially those who are young in the workforce, the best place to start is with the 401(k) retirement plan at work. This is particularly enticing if your employer matches a portion of your contribution. For all practical purposes, the match is essentially free money. Contribute at least enough to achieve the match, and then try to increase the amount contributed over time. Currently, the 2018 annual participant contribution limit is $18,500 or $24,500 for those 50 or over. The money is withheld through payroll deduction and you can save up to the contribution limit of your pretax income, in a Traditional 401(k), or after tax in a Roth IRA. If you leave your job, you can typically keep it in the plan, roll the account over into a new employer’s 401(k) (if allowable), or rollover to your own IRA. This type of retirement plan is more typical, employees of nonprofits may be offered a 403(b) instead. They have similar rules.
Anyone can contribute to an Individual Retirement Account (IRA). The 2018 annual limit is $5,500 and $6,500 if you are 50 or over. The money grows tax-free. You can contribute to both an IRA and a 401(k), but if you are covered by a plan at work, you cannot deduct your IRA contributions from your taxable income if you earn more than $73,000 for individuals (phase out from $63,000-$73,000) and $121,000 for married couples filing jointly (phase out from $101,000-$121,000). If you are not covered by a retirement plan at work, you get the full deduction no matter your income, unless you file jointly with a spouse who has a retirement plan at work.
With a Roth IRA, you are contributing with after-tax dollars and there is no tax deduction for your contribution. The money you earn grows tax-free, but unlike Traditional IRAs, you pay no tax on withdrawals after you reach 59 ½ and there is no mandatory withdrawal at age 70 ½. You can also withdraw the amount you contributed (not earnings, though) at any time with no penalty or no taxes due. The contribution amounts are the same as a Traditional IRA, but to contribute to a Roth IRA, you must make less than $135,000 for singles and $199,000 for married filers. If your income is more than or equal to $120,000 (single) or $189,000 (married filing jointly), your allowed contribution is reduced. You can contribute to both a Roth IRA and a traditional IRAs, but the limits apply to your total contribution.
Another less known way to save where you can also minimize taxes and prepare for health care costs is with a Health Savings Account. You can use the money for medications and doctor visits not covered by insurance, but you can also pay those expenses out of pocket and leave the money in your HSA to grow. If you need the money later, you can be reimbursed for past expenses. The annual HSA contribution limit is $3,450 for singles and $6,850 for families covered under qualifying family medical plans, with an additional $1,000 contribution if you’re 55 or older. If you leave the money in the account, it can stay in the account, unlike FSA accounts that must be used by the end of each year. Once you are 65, you can withdraw money for any reason without penalty, but you must pay income taxes on the money you withdraw if it’s not for qualified medical expenses. Or, you can use it for qualified medical expenses tax-free. If you withdraw the money before you are 65 for any reason other than qualified medical expenses, you will have to pay taxes plus a 20 percent penalty, thus the need to save medical receipts!
If you are a sole proprietor, you can set up an individual 401(k) or solo 401(k) and make contributions as both the employee and employer. The business owner can contribute elective deferrals up to 100% of compensation up to the annual contribution limit of $18,500 ($24,500 if age 50 or over) plus employer nonelective contributions up to 25% of compensation as defined by the plan. Total contributions cannot exceed the 2018 limit of $55,000 (not counting catch-up contributions for those 50 and over). Self-employed individuals must make a special computation using the rate table in Chapter 5 of IRS Publication 560 to figure out the maximum amount of elective deferrals and nonelective contributions.
A SEP IRA is used primarily by the self-employed or small business owner. SEP stands for simplified employee pension and is usually easier to set up than a solo 401(k). Contributions are made to an Individual Retirement Account established for each plan participant and it follows the same investment, distribution, and rollover rules as traditional IRAs. The contributions you can make to each employee’s SEP-IRA cannot exceed the lesser of 25% of compensation or the 2018 limit of $55,000. The same percentage the employer contributes to the owner’s plan must be given to employees too. Again, if you are self-employed, you must use special rules to calculate contributions for yourself.
Simple IRAs allow employers with fewer than 100 employees to set up IRAs with less paperwork. Employers must either match employee contributions or make unmatched contributions. Employees can contribute/defer up to $12,500 annually with catch-up contributions of $3,000 for those 50+.
So many good choices! Which plan, or combination of plans is right for you? If you have limited funds to start with, what to do first? If you have contributed the max to one, which is next? As financial planners our job is to walk you through your particular situation, needs and goals to determine the better choice(s) for you and your family. It is not only about dollar amounts, though that is a significant factor. Retirement is also about quality of life, expectations, and what is truly important to you. Is it family? Health? Travel? Giving? What is important to you now and in the future needs to match where and how you spend and invest those dollars. No more putting it off. Start today.
In times of market volatility.
To Our Clients:
First of all, thank you for the opportunity to be a trusted advisor for your financial planning & investment needs. We take our responsibility very seriously and know it's important to you to be informed about the status of your financial plan and investment accounts.
After several years of very low volatility and new market highs, the last few months have reacquainted us with market volatility.
It is our goal to have done a good job of assessing your risk tolerance and time horizon to build a portfolio that will meet your long term investment needs. We hope to have achieved this during the conversations we've had at our review meetings about market cycles and the inevitable return of market volatility and potential losses during those cycles.
None of us know what the future will hold, but we do know that the path to long term success in the market is comprised of a few key principles:
- Develop a sound strategy, and stick with it unless something significant has fundamentally changed.
- Keep fees in check. We use investment options that keep fees much lower than industry average!
- Stay consistent. Choosing to 'change horse mid-race' introduces additional risk to the portfolio at exactly the wrong time.
- For those that are still in the accumulation phase, a market downturn represents an opportunity to buy the same assets at a reduced price, as hard as it may be to see it that way at the time.
- Stay focused on your long term goals. Stay calm even when it seems tough.
If you do have any questions or concerns, we are available. We want you to feel confident in your financial future!
Bridge Financial Planning
Many clients have told us that they’ve wanted help with their financial planning & investing work in the past and have tried only to feel overwhelmed, intimidated, or felt like the process ‘wasn’t for me’.
Bridge Financial Planning was built with these insights in mind. We think financial planning should be empowering and engaging. We know that when there’s a clear direction and less stress involved with financial decisions, you have more time to spend on the things that are most meaningful to you!
We can help you understand the implications of financial decisions and take the guesswork and stress out of managing your finances. Each aspect of your financial life is only a part of the larger picture. For example, a decision about your child’s education may have a direct effect on how and when you meet your retirement goals. Or an investment decision may have tax consequences that are harmful to your estate plans. Often, monthly spending habits affect your long-term goals. Your financial decisions are interrelated.
If you need help identifying risks and establishing and prioritizing goals or if you are not sure where and how to start, we may be the solution.
What should I expect from a financial planning relationship?
A professional advisor should always place the interest of the client ahead of his or her own – the definition of being a fiduciary. If a planner is a fiduciary, then he or she must understand the client’s goals, needs, and current financial situation; and make recommendations based on the best available options.
That’s why we are proud to be one of only a few firms that voluntarily holds ourselves to the highest standards in the industry by being a member of NAPFA (1 of only 4 in the Chattanooga area). Jennifer Harper has been a CFP® professional since 2006, and Allyson Hauss is a candidate for CFP® certification. We are a fee-only firm. That means we do not accept commissions, referral fees, or kickbacks from anyone. That allows our clients to focus on what’s important to them and know that we’re doing the same. We have signed a fiduciary oath.
Not all advisors are held to this standard. You should ask about it as you interview planners.
From the beginning, Bridge Financial Planning, LLC set out to make financial planning more welcoming.
What does it look like to become a client?
It all begins with a no-cost, no-obligation Initial Consultation. This meeting can be held in person, or by phone or video conference.
During this meeting, you can ask questions, give us insight about your current situation and share your goals and objectives. With the goal of understanding the scope of your needs, we’ll ask questions, and give information on our background, fees, investment philosophy, and explain the expectations of the client/planner relationship.
After our meeting, we take a bit of time to develop a proposal that we believe is best suited to you, based on the initial consultation conversation.
Each client and their situation are unique. We offer 3 service options to meet your needs.
1. Some clients are comfortable receiving their financial plan and implementing the plan on their own. For them, we offer hourly planning on an as needed basis. It can be customized to focus on one, several, or all financial planning topics.
Even ‘do-it-yourselfers’ that have the time and expertise to do their own planning and/or investing have received value from our professional and objective advice.
2. Others would benefit from more ongoing accountability to be sure they stay focused and on-track. But, they may not have a lot of assets to manage – yet, or may have a lot of investments held in an employer retirement plan. For clients like this, we offer a monthly retainer service model. We work together closely in the early months to be sure everything is moving in the right direction. From there, we can meet as needed and tackle any revisions or updates that are needed along the way to stay on track.
3. We also offer asset management services. Asset management includes financial planning when assets are greater than $250,000.
After mutually determining the scope of the financial planning engagement, the proposal will clarify the goals discussed and the steps going forward. Client agreements and regulatory compliance documents are shared and completed. Questionnaires will follow to further determine not only your stated needs and goals, but also values, priorities, and risk tolerance.
A secure Client Dashboard is created for each client to log into and add sensitive information as well as link accounts to ensure the most accurate details are used to develop planning and recommendations.
Information we often request include:
· Tax returns
· Credit card Statements
· Bank and Investment Account Statements
· Social Security Documents
· Company Benefits
· Retirement Account Statements and Information
· Insurance policy information (health, property, life, disability, etc.)
· Education Accounts
Next, a Base Facts Review meeting either in person or by phone/video is scheduled to be sure both client and planner are on the same page and all facts and assumptions are correct. After all, a plan is only as good as the information and assumptions going into the plan!
Then we’ll analyze and evaluate your financial details and develop financial planning recommendations, choices, and alternatives based on your circumstances. This is when we create alternative scenarios that will help answer your questions. Common questions include:
· Is it possible for me to retire when I plan to?
· Am I taking enough/too-much risk in my investment portfolio? Am I well diversified?
· Do I have enough/too-much insurance?
· Can I afford to fully fund my child(ren’s) education and retirement too?
· Should I focus on paying down debt or saving more?
· Which is better for me: renting or buying a home?
· Should I keep my mortgage or pay it down quickly?
· What if we moved to another state in retirement?
· Can I still meet my long-term goals if I took a pay cut for better quality of life?
· As a business owner, how can I manage the financial interconnection between my business and personal finances?
Once we’ve spent time creating your plan, we schedule a time for the Plan Delivery meeting. This is a time for us to share our observations and advice. It is also a time for educating and understanding the impacts of different scenarios. We’ll cover each of the topics outlined in our client agreement.
When we have an ongoing client relationship, the next step is implementing the plan. We can help implement investment strategies and help you stay on track with other tasks such as debt reduction, employee benefit changes, and provide support and encouragement as you become more financially empowered and your plan is more aligned with your goals.
We can help you avoid financial setbacks, deal with unexpected life events, get out of and/or avoid debt, evaluate education and retirement spending and scenarios, and decide where to put your money to reach your goals.
Have confidence that with clear direction you can make progress toward your financial goals.
Will it take time, determination, and discipline on your part? YES!
Schedule your Initial Consultation HERE.