Planning for Financial Success & Happiness

Who needs financial planning?

If you want to get through retirement on more than a shoestring, financial planning is for you. To reach any of your financial goals, either in the near future or further out, you most definitely need a plan. Whether you want to buy a home, go to college, or build your emergency savings fund, you will need a strategy to fulfill your goals. Additional financial considerations may include debt services, optimizing your social security strategy, creating estate plans for your heir(s), and building an investment portfolio. 

When should you start financial planning?

It’s never too early to start. Even if you haven’t done it already, there are a lot of great ways to get going and opportunities to make the most of your income, no matter where you are on your financial journey.

If you’re just beginning in your career, your focus should be on building an emergency fund in case of layoffs or unexpected costs, a plan to pay down your student loans, if you have any, and to work on your 401k investment portfolio.

If you’re more toward the middle of your career path, you’ll want to focus on college planning for your children, working on early mortgage payoff, optimizing your 401k, and creating an estate plan.

If you’re nearly at the end of your career path, you need a really solid idea of your retirement glidepath. Even if you didn’t make perfect financial decisions throughout your life, there’s still time to make the best of what you have.

If you’re already retired, you may need help getting your affairs in order for your family after you’re gone. Investments, estate issues, and other financial affairs are easier to set in order now and will save your surviving heirs much heartache later.

Where should you get financial planning advice?

Always make sure you seek out and retain the services of a fiduciary. Legally obligated to put your interests first, a fiduciary is held responsible for their decisions in regards to your assets, throughout every stage of the client/advisor relationship.

If you work with an expert, what does financial planning typically include?

A good financial expert should always focus on you and your goals. Your financial planning should never include what the expert, or company, wants to sell you. Make sure to have quality, in-depth discussions about what you want to accomplish, and what financial goals you want to set.

These discussions should include:

• Issues faced during the accumulation, pre-retirement, and retirement phases
• Budget planning
• Employer-sponsored retirement plan optimization
• Life insurance
• Education and college planning
• Estate planning
• Tax optimization
• Health care
• Long-term care
• Social Security optimization
• Retirement distribution

Make sure to cover all of these important topics so that you know where you stand from the beginning.

How much does financial planning cost?

We’ve all heard the saying, “You get what you pay for.” Something “free” may not have any up-front cost now, but this pro-bono advice may cost you much more later. On the other hand, a high price tag doesn’t guarantee quality. The key here is to find the best value in whatever services you retain, not just the best price.

When you make sure to work with a legitimate fiduciary, you know that their financial interests are the same as yours. This puts you on better ground from the outset. In addition, if the services you retain are commission and/or fee-based, they have a financial incentive to increase your wealth.

What questions should you ask your financial planner?

The most important question to ask any prospective financial planner is, “Are you a  fiduciary?”

If they answer anything but, “Yes,” then get up and leave. They will not have your best interests at heart, and likely only want to sell you something.

If they answer that yes, they are a fiduciary, then the next important question is, how they make money from their work. A fee-based structure is ideal. Ask questions now—before becoming a client—about how they are compensated. Make sure you understand how much the services are likely to cost you so that you can make an informed decision.

Make sure to ask about their process, how they work, and what exactly they will do for you. If they start telling you about the products they want to sell, you don’t want to hire them! Financial responsibility begins with finding a responsible financial planner.