{"id":432,"date":"2011-03-30T16:53:10","date_gmt":"2011-03-30T16:53:10","guid":{"rendered":"http:\/\/vhfinancialmanagement.com\/?p=432"},"modified":"2011-03-30T17:03:44","modified_gmt":"2011-03-30T17:03:44","slug":"ten-things-financial-planning-should-be","status":"publish","type":"post","link":"https:\/\/vhfinancialmanagement.com\/2011\/03\/30\/ten-things-financial-planning-should-be","title":{"rendered":"Ten Things Financial Planning Should Be!"},"content":{"rendered":"
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I recently wrote about some of the misconceptions surrounding financial planning. I discussed what financial planning is not<\/a>. After clearing the air about financial planning misconceptions, let\u2019s discuss what financial planning should be.<\/p>\n

Here\u2019s a list of ten things (in no order of importance) that are indicative to good financial planning.<\/p>\n

Financial planning should be:<\/p>\n

1. Comprehensive\/holistic <\/strong><\/p>\n

I often tell clients that financial planning is similar to Newton\u2019s Third Law…every action has an equal and opposite reaction.\u00a0 Simply put, making a change (positively or negatively) in any area of your financial world will impact other areas.\u00a0 It\u2019s imperative that all aspects of your financial plan work together hand and glove.<\/p>\n

2. A process, not a one time event<\/strong><\/p>\n

It takes time to fully implement all the elements needed for a solid financial plan. This can only be achieved by moving the puzzle pieces one at a time. Think of it this way: How do you eat an elephant\u2026..one bite at a time!<\/p>\n

3. Tax Centric<\/strong><\/p>\n

Taxes are the hub of the wheel. \u00a0A plan developed without strong consideration to the taxpayer\u2019s taxable bottom line is almost criminal!<\/p>\n

4. Cooperative<\/strong><\/p>\n

The process of financial planning should not be a one way street.\u00a0 While a recommendation or idea may be the right thought from a theoretical standpoint, it has to be the right recommendation for the client.\u00a0 My job is to help my clients sleep better at night, so, if my work is antithetical to that philosophy, I am not doing my job.<\/p>\n

5. Balanced<\/strong><\/p>\n

Life comes at us from all different angles\u2026.sometimes good and sometimes ugly and scary. We have to balance our today and tomorrow. If we focus too much on today, tomorrow may suffer: if we focus too much on tomorrow, today may suffer.\u00a0 Check out Tony\u2019s story<\/a> written by a colleague of mine.\u00a0 This story beautifully illustrates the importance of balance.<\/p>\n

6. Work<\/strong><\/p>\n

Even the best financial advisor can\u2019t do it all for you.\u00a0 Some things have to come from the client. While it may not be strenuous or voluminous work, there should be effort involved. \u00a0One of my favorite quotes is certainly applicable here, \u201c the road to failure is the one of least resistance!\u201d<\/p>\n

7. Big-picture in scope<\/strong><\/p>\n

Clients\u2019 needs, wants, and desires must be viewed from a big-picture perspective.\u00a0 This really helps to align goals and values.\u00a0 Without a big-picture approach, financial planning can become misguided.<\/p>\n

8. Fee-only\/unbiased<\/strong><\/p>\n

Advisors who have a financial interest in the recommendations they make to their clients can be dangerous.\u00a0 It\u2019s important to seek out an unbiased advisor who can deliver advice that is in the client\u2019s best interest\u2026.not the advisor\u2019s back pocket.<\/p>\n

9. Flexible<\/strong><\/p>\n

As we move through the ebb and flow of life, we experience surprises that impact our financial world.\u00a0 It\u2019s not a matter of if: it\u2019s a matter of when.\u00a0 Get sick, lose a job, or economic downturns are few examples of detrimental financial blows. Positive events, such as the birth of a child, an inheritance, or a child receiving a full scholarship to college, can have an impact on our financial plans as well. A relationship with a financial advisor should be flexible to handle life\u2019s curveballs.<\/p>\n

10. Unique to each client<\/strong><\/p>\n

Financial plans carved from a cookie-cutter mold are too generic and not effective.\u00a0 We are all built beautifully unique, and we all have qualities and characteristics that require specific recommendations when it comes to financial planning. Understanding our strengths and weaknesses and developing plans built around our specifics are a big part of the success equation of a good advisor.<\/p>\n

While the ten items listed above are not meant to be inclusive, I feel it\u2019s certainly a good start. Do you have any items to add to the list? I\u2019d love to hear from you.<\/p>\n

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