A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you'll be better able to focus on your goals and understand what it will take to reach them.
Benefits of a Comprehensive Financial Plan
One of the main benefits of having a financial plan is that it helps you balance competing financial priorities. A financial plan will clearly show how your financial goals are related – for example, how saving for your children’s college education might impact your ability to save for retirement. With this information, you can prioritize your goals, implement specific strategies, and choose suitable products or services. Most importantly, you'll know that your financial life is headed in the right direction.
The Financial Planning Process
Creating and implementing a comprehensive financial plan generally involves working with financial professionals to:
1. Assess Your Current Financial Situation
Review your income, assets, and liabilities, and evaluate your insurance coverage, investment portfolio, tax exposure, and estate plan.
2. Set Financial Goals
Establish and prioritize financial goals and timeframes for achieving these goals.
3. Implement Strategies
Address your current financial weaknesses and build on your financial strengths.
4. Choose Products and Services
Select specific products and services tailored to help meet your financial objectives.
5. Monitor Your Plan
Regularly review your plan and make adjustments as your goals, timeframes, or circumstances change.
Key Members of the Financial Planning Team
The financial planning process can involve several professionals:
Financial Planners: Focus on your overall financial plan and often coordinate the activities of other professionals. Learn what makes a Certified Financial Planner different.
Accountants or Tax Attorneys: Provide advice on federal and state tax issues.
Estate Planning Attorneys: Help you plan your estate and give advice on managing your assets before and after your death.
Insurance Professionals: Evaluate insurance needs and recommend appropriate products and strategies.
Investment Advisors: Offer advice about investment options and asset allocation, and help you plan a strategy to manage your investment portfolio.
The most important member of the team, however, is you. Your needs and objectives drive the team, and after considering any recommendations, all decisions lie in your hands.
Why Not Do It Yourself?
You can, if you have the time and knowledge, but developing a comprehensive financial plan requires expertise in several areas. A financial professional can provide objective information, help you weigh your alternatives, save you time, and ensure that all angles of your financial picture are covered. Learn more about the importance of working with a financial planning professional.
Staying on Track
The financial planning process doesn’t end once your initial plan is created. Your plan should be reviewed at least once a year to ensure it’s up-to-date. Changes in personal circumstances or the economy may also require plan modifications. Events that might trigger a review include:
Changes in your goals or time horizons
Life-changing events such as marriage, the birth of a child, health problems, or job loss
Specific or immediate financial planning needs (e.g., drafting a will, managing a retirement account distribution, paying long-term care expenses)
Significant changes in income or expenses
Underperformance of your portfolio
Economic or tax law changes
Common Questions About Financial Planning
What if I'm too busy?
Don’t wait until you’re in the midst of a financial crisis to start planning. The sooner you start, the more options you'll have.
Is the financial planning process complicated?
Each financial plan is tailored to individual needs, so the complexity depends on your circumstances. A financial professional will make the process as easy as possible and answer all your questions.
What if my spouse and I disagree?
A financial professional is trained to listen to your concerns, identify underlying issues, and help you find common ground.
Can I still control my own finances?
Financial professionals make recommendations, not decisions. You retain control over your finances. You decide which recommendations to follow and work with a financial professional to implement them.
This is for informational purposes only. Please speak to a qualified representative about your unique situation. Links within this blog are not associated to Cornerstone Wealth and are subject to change. Hyperlinks will take you to a third-party website whose content Cornerstone Wealth does not control. Investment advisory services offered through Cornerstone Wealth Group, LLC dba Cornerstone Wealth, an SEC registered investment adviser.
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