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I have been asked many times, “What is financial planning?” Or, “Isn't that for the rich and famous?”
Many people have met me on the street here in Northboro and the surrounding communities and tell me that they have appreciated my articles. They wonder if they could use a professional financial planner.
This article, hopefully, will address these often-asked, important questions.
Contrary to the common misconception, financial planning is not just for the wealthy or the famous amongst us. It could be for everyone, or just about everyone.
As an overview, financial planning may help you to increase spendable income, lower your taxes, plan for and achieve certain goals, like buying a house or educating children/grandchildren.
It may also include goal setting, reviewing current cash reserves and debt situation, as well as your risks.
It may be used to plan for retirement and/or monitor your retirement plan's progress. Estate planning or the distribution of one's assets could also be a function of financial planning.
Each situation is different because people's goals, time frames and their value systems are different. A financial advisor should ask questions to draw out this critical information during initial interviews and on-going consultations, rather than pull a “cookie-cutter plan” off the shelf.
Over the years, the advisor could aid clients in making the adjustments as their circumstances change.
People need to understand that when one considers the future, there are no guarantees because no one has a crystal ball to predict exact outcomes. There are historic trends and experiences, but no guarantees for the future.
It has been said that financial planning is a science and an art. There may be different solutions for each situation. The question is which solution might the clients be more happy with and more willing to implement? [Editor's note. This is why many times the best plan is done by those actually living the plan.]
Many clients are, unfortunately, not willing to do what is right for themselves initially. Hopefully, the clients were given full disclosure, along with explanations of the various options available to them. The clients should also understand the positive and the negatives of each option before they, the clients, make the decision.
SPECIALIST
Many clients are becoming more aware that like other professionals - doctors, attorneys, accountants/CPAs, etc. - financial advisors may specialize in certain aspects of the financial profession.
For example, the doctor may be a dentist, a brain surgeon, a heart or cancer specialist, or perhaps a general family doctor. The accountant/CPA may be a generalist or oriented towards small business, corporations, taxes, or high net-worth individuals.
The attorney may be a specialist in divorce procedures, criminal justice, real estate, probate, estate planning, corporate or business law. You may know the financial specialist as a banker, an insurance agent, a stock broker, a retirement plan vendor, or an overall planner/advisor, etc.
The law mandates “continuing education” for most of the professionals just to maintain his or her various local, state and federal licenses and/or registrations.
When it comes to finances today, it may be wise to first of all have a “primary” financial advisor who does “comprehensive” financial planning.
This person should look at all six key financial areas of one's life individually and then in balance with each of the other areas. A game plan or a road map should be designed to get from point A - where one is now - to point B - where one wants to be.
Again, like other professionals, the advisor may call upon other professionals, associations and other resources as the situation warrants it, to assist the client with the agreed-upon road map.
Those six key areas in a simplified form are:
1.) financial position - which is debt management, cash flow, cash reserves for emergencies and everyday opportunities;
2.) protection planning - reviews various areas of risk management;
3.) tax planning - including before taxes, after taxes, tax preparation and tax management issues now and in the future, and
4.) investment planning - looks at one's goals and time frames and then identifies appropriate vehicles to achieve them.
Other keys are
5.) retirement planning that requires specific planning and then on-going monitoring to achieve comfortable retirements;
6.) estate planning - encompasses the individual's pre-determined desires versus waiting for the government to dictate publicly through the courts where assets will go.
Depending on certain factors, a good advisor should save the clients more dollars than the low-cost fees, and help them to achieve the goals that they want, when they want them.
I've heard, “Today, people should be lined up waiting to talk with an advisor.” I personally believe that it is no longer a case of “can a financial advisor help?” but more “how can he or she help?” and “can the client and professional work together?”
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When this article was written and published, Gary F. Restall of AGS FINANCIAL SERVICES was an independent Registered Investment Advisor (financial planner/advisor), Insurance Broker, and a Registered Representative (stock broker) with FSC Securities Corporation, a Registered Broker/Dealer and member NASD/SIPC.
His practice is still located in Northboro and his Life Finances ... Made Simple personally-generated
program for all referrals and clients
is now an online step-by-step simple and easy program some call a "system".
It is a do-it-yourself complete
program designed for a 3rd grade novice to an expert in money and life issues. It encompasses many of the former comprehensive financial planning principles he used as well as the full budgeting and organization system techniques and a whole lot more that he was known for.
In addition, it has been upgraded to include much more than what he could provide individually with clients. For example, material from a recent international college course on leadership as well as material from two other courses is included.
This
Life Finances ... Made Simple "program" is thorough and all-inclusive.
The clients loved the original system so much, they encouraged me to make it available nationwide online. That has been done and is available through this site.
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