Financial Advisor Help | What is Financial Planning?
You never know when your financial circumstances, or the market, are going to change. Financial planning helps offset some of the anxiety and risk that comes with this uncertainty by helping to “futureproof” your funds.
At its core, financial planning is all about proper money management. A good financial plan both defines your monetary goals and lays out a plan of attack with actionable steps to achieve them. Regardless of your specific goals, the overall objective is always to maximize your wealth while minimizing risk.
A typical financial plan follows these steps:
1. Establish your goals
2. Gather your financial data
3. Compare your goals against your current financial state
4. Develop a plan of attack – in the short-, medium- and long-term
5. Put your plan into action
6. Monitor your results and adjust as needed
What Does a Financial Advisor Do?
From basic budgeting to robust retirement planning, financial advisors assist in all areas of financial planning. They serve as both assessors and educators, reviewing your financial situation, recommending the best course of action and teaching you how to optimize your funds moving forward.
Financial advisors make it their job to become intimately familiar with your finances. They use this information to measure your current financial state against your short- and long-term goals to create a savings and investment plan that is uniquely tailored to you.
Do I Need a Financial Advisor?
While we might be biased, we believe that everyone can benefit from the guidance of a professional financial advisor. Whether you are a new parent trying to save up for your child’s college fund or a senior preparing for retirement, every stage of life presents unique challenges that a financial advisor is happy to help you tackle.
That being said, there are certain areas of financial planning in which a financial advisor can be especially beneficial. These include, but are not limited to:
- Executive Financial Planning
- Divorce Financial Planning
- Investing
- Insurance Services
- Tax and Accounting
- Estate Planning
Managing your own monthly budget is one thing, planning your estate or navigating a divorce all by yourself is another. Financial advisors have the insight and experience necessary to face these tricky situations head-on and prepare you for long-term financial success.
Let’s dive into each of these areas below and discuss the key roles a financial advisor can play.
Executive Financial Planning
Money is a source of frustration and anxiety for many. It is something we know is important, but often avoid addressing. If you are feeling uncertain about your financial situation and concerned about the future, executive financial planning can help.
Executive financial planning is designed to help organize your finances and create a plan to maximize your wealth. It gives you the tools you need to confidently achieve your financial goals and get the greatest enjoyment out of life. With the right financial planner, you can:
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Save money faster
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Maximize your income
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Protect your existing assets
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Transfer funds to those you love
Divorce Financial Planning
If you are going through a divorce, the last thing you want to worry about is how you are going to divide your assets. Certified Divorce Financial Analysts (CDFAs) are there to help make the process as painless as possible and avoid ugly, expensive disagreements.
When it comes time to negotiate your divorce, a CDFA should be the first person you contact, even before you consult an attorney and actually begin the process of divorce. While attorneys are well versed in the laws of divorce, they are rarely trained in the financial complexities and nuances that go into dividing marital assets.
This is where a CDFA comes in. They can give you valuable advice and steps to take in the planning stage to create a more amicable split from the get-go. Once the process begins, a CDFA is there to act as a neutral third party, offering financial guidance and mediation on behalf of both parties, not just a single side. This helps ensure that the compromises and decisions made are as fair and equitable as possible.
Investing
Investing is all about increasing the income power of your portfolio. And while we all like the idea of multiplying the value of our investments, most of us do not have the financial savvy that is required to maximize them on our own.
Am I investing too much? Too little? Am I being too conservative? Too risky?
The questions and confusion are enough to make anyone more than a little nervous. Financial advisors are there to clarify those areas of uncertainty and help your money grow to its highest potential.
If you are uncertain about your investment strategy or are looking to invest for the very first time, a financial advisor can help you achieve the highest level of return, at the lowest possible risk to you.
Insurance Services
If there is anything we like talking about less than money, it is death and disability. No one wants to imagine a world in which they are unable to be there for their family, but it is a fact of life we must all consider and prepare for.
At Tranel, we like to break down the concept of life insurance into one simple sentence: Pay today to protect your loved ones when you are gone tomorrow. Everyone should protect their families by investing in life insurance, but determining how much coverage you need is not so straightforward.
As your personal (marriage, children, etc.) and financial (loans, taxes, salary, etc.) situations change, so should your insurance. Financial advisors make it their job to guide you through the wide variety of options and help you choose the one that best suits your current needs and future goals. They will continue to work with you through the years to adjust your policy as needed and make sure your family is taken care of.
Tax and Accounting
Taxes are an annoyance that few look forward to. So, why deal with the headaches and risks of filing them yourself when you could work with a professional accountant? Tax and accounting specialists continuously stay up-to-date with the latest tax code to ensure that your taxes are accurate, complete and tailored to get you the best possible return.
Whether you are handling your own finances or those of an entire business, tax specialists can help you stay prepared not just through tax season, but all year long. Tax planning in the off-season can help simplify the process when tax time hits and help you execute your financial plan in the most tax-efficient way possible. This will help minimize your tax liability in the long-run.
A tax specialist could be an excellent resource if you:
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Have received a letter from the IRS
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Are filing an individual or business return
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Want to create a tax-efficient retirement plan
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Have any tax or accounting related questions
Estate Planning
When it comes to estate planning, having the documents does not necessarily mean that your goals are being met. Miscommunication and lack of clarity can cause numerous issues, such as unnecessary death tax or probate costs.
Estate planners know what questions need to be asked and answered before documents are drawn up to ensure maximum efficiency and help you get the most out of your plan. They are also an excellent resource to have down the road if changes come about or updates need to be made.
If you are thinking about working with an estate planner, make sure you have the following documents prepared for your first meeting:
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Durable power of attorney
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Advanced medical directives
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Will
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Letter of instruction
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Living trust – preferred, but not always required
Still Unsure if a Financial Advisor is Right for You?
If any of the above situations apply to you, then a financial advisor could be a wonderful addition to your financial planning process. But if you are still unsure whether or not professional guidance is for you, try using our financial scorecard. We’ll show you how your financial score measures up, and reveal the ways in which a financial advisor might be able to help you best manage your money.
Whatever You Do, Make a Plan and Stick to it
Whether you choose to work with a financial advisor or manage your money on your own, creating a financial plan is a necessity. You need a budget, actionable goals and a vision for your financial future. Most importantly, you need to continually assess your progress and adjust your plan as your financial and personal circumstances inevitably change.
Even if you do not need a financial advisor now, you likely will in the future. When the time comes, whether that is a week from now or ten years from now, our team at Tranel will be happy to help. We’ll make it our mission to increase your clarity and confidence in your financial future. Contact us today or explore some of our financial planning resources: