Financial Planning:

What is financial planning?

You have probably heard the term "financial planning", but what, exactly, does it mean?  To me, financial planning is the process of figuring out what your financial goals are, looking at the resources you have and those you expect to have, and coming up with a plan to get from where you are now to where you want to be in the future.  

The process will be slightly different for each person, and, frequently, it is not a one-time event.  As circumstances change and time passes, you should review and update your financial plan to make sure that it still works for you.  

Whether you call it financial planning or not, every time you think about a budget or a future spending goal, you are doing a form of financial planning.  

Financial plans and financial planning

Financial planning is the overall process and a financial plan is what is created to help you reach one or more specific financial goals.  It shows you how to get where you want to go.  A financial plan can be very focused on a single, short-term goal like, "how do I find ways to save enough for a down payment on a house?" or, "how do I begin investing?".  Or, it can be focused on longer-term goals like, "how do I make sure that I'm on track to retire when I'm 65?"

A financial plan is simply a road map for you to follow as you move towards your financial goals.  It can be simple or complex.  It all depends on your needs. 

A financial plan will generally include one or more of the following areas:

  • Cash flow and budgeting - paying off debt, building savings, and living within your means.

  • Investment advice and planning - choosing investments in your 401(k), setting up an IRA, etc.

  • Retirement planning - how much to save - and how, exactly, to invest and to budget for retirement.

  • Insurance planning - making sure that you understand the risks you face, and how to mitigate them.

  • Estate planning - how to figure out what to leave to heirs and beneficiaries.

  • Tax planning - how to make sure that you are being as tax-smart as you can be.

  • Employee benefits planning - understanding your benefits so that you get the most out of them.

How does the financial planning process work?

It starts with a conversation.  About you - and your needs.  That conversation helps to determine what type of a plan you might need, how long it will take to complete, and what it will cost. 

Once the scope of the plan is determined, I will ask for your financial information to help me understand where things stand right now, and I'll ask a number of follow-up questions to make sure that we're on the same page about your needs, your finances, your risk tolerance, and your timeframe.  

In most cases, we will sit down and walk through a draft plan and draft recommendations.  This gives both of us another opportunity to make sure that your priorities and goals are accurately reflected.  

Once you are satisfied that the plan represents what you want to accomplish, I will prepare a final plan that includes recommendations and initial projections about how the suggested steps could help you reach your financial goals.  

That's it.  That's the process.  You might decide that you want to update your plan once a year or once every few years.  If so, you would contact me whenever you want to talk some more.  In general, these updates cost about half of the initial plan because I will already have a lot of your information.  If a number of years have passed since the initial plan - or if your life has changed a lot - the cost of the update will reflect that.  

Or, you might decide that the one plan is enough and that you're on track.  That's great too.  Whatever works for you. 

Some clients request help in implementing recommendations or providing ongoing monitoring of the plan, and that can be arranged as part of the original financial planning fee or as an additional fee. 

What Does It Cost?

It really depends on what you need, how complex your situation is, how many scenarios and options you want to see, and how broad your request is.  The fee that I quote you is based on how long I think it will take me to complete your plan.  While the cost will depend on your specific situation, many plans fall in the range of $500 for very basic plans with a narrow focus to $2,500 for a broader plan covering several areas or including a number of different scenarios.  

Ongoing Financial Planning:

This service is for clients who have completed an initial financial plan and want continued access to a financial planner.  The service runs on a 12-month subscription and is tailored to the needs of each client.  The core service offering is an annual update of the financial plan and access throughout the year for guidance on minor and/or infrequent needs (e.g.: there are new investments in my 401k, what do I do?).  

The minimum price for this service is $500 for the year. The fee is set on a case by case basis and depends on what you, as the client, want to achieve during that 12 months.  The minimum price includes an annual review and access throughout the twelve months to answer questions. It is not for people who want ongoing investment advice. It is meant for people who want an annual review of their plan and investments and the ability to have a resource to help answer questions.

If your needs extend beyond the basic annual review and quick questions, we would estimate what your fee would be based on what you were trying to accomplish for the year. For instance, you might know you will need help getting a mortgage and buying a house. Or maybe you want some additional guidance as you prepare to retire. Those items would result in an annual fee for that year that is above the minimum.