A financial plan takes a comprehensive look at where you are today and describes where you want to go with as much detail as possible. It’s not a one-size-fits-all document, as everyone’s goals and situations are different. Here are the steps you and a financial planner may work through when creating a financial plan.
Define goals
The first step is to define your goals and objectives as precisely as possible. Some goals are easy to measure, such as buying a new home. Others may take more though; however, without a clear destination in mind, it’s tough to create an effective roadmap to get there.
Gather data for analysis
Once your goals are defined, it’s time to gather data for analysis. All assets and liabilities are summarized. All income and expenses are measured. Reasonable projections for the future are made based on a number of variables, including retirement age, length of retirement/life expectancy, investment rates of return, inflation, income taxes and more.
Determine specific recommendations
Based on the data, a financial planner will develop specific recommendations to help you achieve your goals. A financial plan maps out the necessary steps to achieve your goals. It may include making changes to investments, insurance, or estate planning documents. It may also include recommendations to pay off debt or sell an asset.
Implement the recommendations
A plan is only valuable if it’s followed and executed. Implementation is a coordinated effort between you, your financial planner, and other advisors. This could also include accountants, attorneys, investment managers, insurance agents, and others.
Monitor and revise
Once the initial recommendations are put into action, schedule periodic checkups to ensure everything is on the right track. Since your situation evolves over time, so should your financial plan. Expect follow-up steps to keep the plan updated and in alignment with your goals.
To learn more about a financial plan, speak with a wealth advisor today.
This article is for informational purposes only and is not intended as legal, tax, or investment advice. You should consult with qualified professional advisors regarding your own situations.
Non-deposit investments are not FDIC insured and may lose value. All investments involve risk, including the possible loss of principal.
