financial planning

by: John J. De Goey, CFP

Plan the work; work the plan. So much of getting ready to retire can be addressed by a qualified professional who knows the ins and outs of setting and maintaining reasonable expectations and who can assist in executing around those expectations once they have been agreed to.
It certainly needs to be noted that good financial advice is not a one-time event. Instead, getting and giving financial advice is an ongoing, iterative process. People graduate from school, find work, get married, start families, pay off debts, take on mortgages, get promotions, acquire stock options, endure disabilities, buy second properties, suffer temporary setbacks, and experience myriad other things. Life happens. Circumstances change and so should the plan. The trite little saying that many people in my line of work are fond of using is that "people don't plan to fail; they simply fail to plan."
Consumers need to be able to change with the times in managing the various developments in their lives, and good advisors (especially those holding themselves out as "planners") should enable their clients to focus on all aspects of their financial lives, with the most important things being addressed first.
A financial plan is usually done at the beginning of a relationship in order for the advisor to win an account, but it is usually not reviewed. Often, there isn't a formal plan, just a brief written action plan focused on narrow investment matters and perhaps the provision of insurance. Some commentators are fond of saying that if financial planners were charged with financial planning as a crime, most would be exonerated because there wouldn't be enough evidence in their files to support the charges.
Planners, advisors, brokers, and others who go by similar titles should all be engaging their clients in regular processes and procedures to make sure they are on track with their plans. This assumes there are financial plans in place to begin with. The universally accepted six-step process to financial planning is:
Understand the client's situation.
Clarify goals and objectives.
Identify any particular barriers or unique circumstances.
Make written recommendations with clear alternatives.
Implement the chosen route.
Review the plan regularly.
Clients can work together with their advisor to complete self-diagnostic checklists on a wide variety of financial matters including client awareness, investment planning, investment policy statement monitoring, debt management, tax planning, estate planning, disability and income protection, and asset protection. A qualified, professional advisor has a pivotal role to play in this instance. In the coming weeks, we'll take a look at some of these matters. In addition, we'll look at the increasingly important role being played by the concepts of transparency and professionalism.
More and more, there's a mindset taking hold that the details of a working relationship ought to be documented. Whether those details involve itemizing the terms of the engagement (working relationship), itemizing the manner and quantum of compensation that the advisor might earn, or disclosing investment or planning philosophies in advance, I'm seeing a clear preference from consumers who want to understand plainly what it is they can expect from the person they hire to look after their life's savings.