A financial plan is a written document that sets out recommendations and objectives for your finances. You should expect the following when creating a financial plan with a qualified advisor.
Client Understanding: There are two types of information an advisor will seek: quantitative and qualitative. Expect your advisor to request as much information as possible.
• Quantitative data consists of financial information (financial statements or aggregated data from InvestorKeep) and personal information such as age, income, number of children, etc.
• Qualitative data consists of an understanding of your attitudes and beliefs on spending, saving, risk tolerance, etc. Creating a financial plan can feel like an interrogation, but the more your financial planner understands, the more complete your plan will be.
Identifying Goals: This is a collaborative process consisting of identifying and clearly defining goals. Your goals should be placed in order of priority, and you should understand how goals interact and may impact one another.
Analysis: Once your financial planner has gathered the necessary information and identified appropriate goals, they will start the analysis process developing specific recommendations. This step may require more than one meeting.
Develop Recommendations: Once analysis is completed, the planner will develop recommendations. These recommendations are based on the planner’s expertise and may require input from other experts such as attorneys or accountants.
Presenting Recommendations: Depending on the complexity of your financial situation, this step may also require multiple meetings. The most important part of this step is that you and your financial advisor agree on the plan (it is highly advisable this agreement be in writing).
Financial Plan Implementation: Once an agreement has been reached, a scheduled plan should be in place to implement the plan. This may require some coordination among other professionals, attorneys, accountants, etc. (depending on your situation).
Monitoring & Updating: Expect to update your financial plan any time a life event impacts your finances or financial goals: birth of a family member, the death of a family member, marriage, divorce, job loss, inheritance, etc. Additionally, it is vital that the plan is constantly and consistently monitored to ensure that you are on track to reach your goals. At a minimum, plan for an annual meeting with your financial professional to review and update your financial plan.
In conclusion, money is merely a tool to live the best life possible. Financial planning is essential to accomplishing your financial goals. Failing to plan can be detrimental to your life and financial goals. A good plan can have a profound impact on you and future generations. InvestorKeep highly recommends meeting with a financial professional to establish a plan, and using the InvestorKeep platform to monitor your progress.