Like most changes we want to make in life, the first step is always the hardest. Without a doubt, getting started early with good savings habits is crucial. Funding your 401k plan up to at least the employer match, funding a Roth IRA, or paying an additional $50 a month towards debt are all great examples of saving that can aid in your long-term financial success. Do yourself a favor and start NOW!
A good financial planner must be able to “wear many hats.” Rather than being merely transactional, your planner should be someone that you trust and feel comfortable with guiding you through the various financial phases of life. Another important trait for your planner is that they actively listen to your goals and concerns, and find the most effective way to address them, rather than being self-serving.
A financial plan is no different than any other plan. “Your plan” allows you to visualize the steps you need to take to be successful. With the growing list of financial topics clients are faced with, a financial plan will help organize potential solutions for each of those, focusing on what’s most important and timely first. A strong financial plan should help answer all those “what if’s” that keep people up at night.
A financial plan should include projected income in retirement, potential answers to “what if” scenarios, insurance analysis, tax analysis, estate plan review, and a focus on what your goals are in relation to all these topics. People never get asked what they want their money to do for them, and that should be one of the first questions that we as advisors should be asking.
Are you a fiduciary? What services do you provide for clients? How do you communicate with clients, and how often? What certifications do you have? How do you make money?
Fiduciary responsibility is a legally and ethically higher standard of financial planning where the advisor must always act in the best interests of the client, at all times. Since the advisors within our firm are also CFP professionals, we adhere to this standard, as well as other duties relating to the CFP Board’s “Code of Ethics and Standards of Conduct.”
Life insurance can provide many solutions within a financial plan. It can not only cover a family in case of catastrophic or unexpected loss of life, but also can provide tax deferred savings for higher net worth clients. It is a very flexible financial vehicle that can check several boxes in a successful financial plan.
A dollar amount or percentage is extremely difficult to generalize for saving. It all starts with a budget and understanding what you have left over every month. Once you can quantify that, the goal should be to bucket those remaining funds and tie them to specific goals: retirement, new car, emergency fund, college planning, etc. This number should continue to be evaluated as income, life, and goals change.
Are all your eggs in one basket? This simple statement is old but wise. Diversification in investment terminology refers to making sure your overall portfolio is invested in several different things. Some examples include stocks, bonds, mutual funds, ETFs, and real estate. Over time, diversification should help soften large swings in your average investment returns, as different asset classes and types of investments react differently to various financial trends.
First and foremost, thoroughly discuss your finances with your partner, as money can be a huge stressor for married couples. Some possible considerations include joining bank accounts, updating insurance and protection, revisiting tax situation, updating estate planning documents, and updating beneficiaries for retirement accounts.