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The Value of a Financial Plan

The term “financial plan” can be a bit ambiguous and mean different things to different people.  Ideas can range from a plan someone has formulated in their head to a detailed and mathematically calculated plan that covers investments, taxes, life insurance and estate planning.

We have three learning objectives for this post:

  1. To understand the value of a financial plan and how to use one
  2. To identify who to use for planning and the appropriate cost
  3. How to take steps to implement and adjust your plan once it is defined

The financial planning process used to be commonly a one and done concept, where a financial professional would help develop the written plan based on your goals for your lifestyle and retirement, deliver the plan in a nice binder and then sell you insurance and investments to implement the plan.  After that it could be years until you engage with the planner again based on some life event that required adjustments to the plan and then start the cycle again.

Quality financial planners today use a relationship approach to planning.  The plan is not intended to collect dust on a bookshelf, but rather be reviewed at least once a year or when critical financial events occur to make sure the plan is still appropriate or if adjustments are necessary.  No set of assumptions used to develop a plan will ever work out to be exactly what happens; so on-going monitoring and fine tuning are an important part of the process.

You can attempt to develop your financial plan on your own.  Web-based tools for this are available at quite a few financial websites, such as

Vanguard       Securities and Exchange Commission 

Having the software and tools available can suffice in simple situations, but what is not available with these online services is the knowledge and experience of a planner who gets to know your situation and advise you from the human standpoint.  The human interaction is invaluable to build confidence and respond to critical financial events.  This “live” interaction is available from some online services or, of course, from your local planner or someone you may be referred to by a friend or relative in some other location.

Many investment professionals are good at financial planning.   Some, of course, are not and use the planning process to facilitate the sale of annuities and other vehicles that earn them large sales commissions.  I suggest seeking out a fee-based planner where the planning process occurs with less conflicts of interest.  Many planners carry professional designations which carry the requirement that the planner uphold a high level of ethics.  The Certified Financial Planner (CFP) designation and Retirement Income Certified Professional (RICP) designations indicate that a course of detailed study has been completed, exams successfully passed and annual continuing education requirements have been met.

The cost of financial plans can vary widely based on the planner’s experience, the scope of your personal situation and the level of planning needed.  Some planners charge hourly and rates may be from $100 per hour to as much as $500.  Flat fee arrangements are also possible and range from $1,000 - $5,000.  After developing the initial plan, most planners offer a retainer arrangement, where you have access to ongoing advice and plan updates.  Planners who also act as investment managers will often include the planning fees in the fee they charge for the supervision of your investments.

The financial plan is worth exactly nothing if you don’t implement the recommendations in the plan.  But implementing all of the recommended actions may be daunting.  There may be a lot of work to do since a complete financial plan covers many areas of your life.  At Integra Capital Advisors we use a “What’s Important to You” list in our planning process to make sure we identify the top areas of concern or priority for each of our clients.  We usually work on these top areas first and then move on to others.  By focusing on the top few priorities, we can get things done and the accomplishment of some goals makes the process fun.  By doing a couple things at a time we avoid the paralysis that can come with looking at a big project and not knowing where to start.  As they say “you eat an elephant one bite at a time!”

In summary, taking the steps to define and implement your financial plan will bring a world of confidence that you are off in the right direction.  Continued monitoring and engagement with your planner will keep you on track as life comes your way.

At Integra Capital Advisors we call our financial planning process the Waypoint FORMula.  Call us today at 941-778-1900 or visit www.integracapitaladvisors.com today to schedule a time to talk.

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