A friend sent me this. I found it useful in understanding the planning process. It is mostly 101/basic information. But some of it was new to me.
This was a long article, so this is part 1. I will post the second half shortly.
Financial Planning--Helping You See the Big Picture
Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial
goals that may be important to you, and each comes with a price tag attached.
That's where financial planning comes in. Financial planning is a process that can help you reach your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.
Why is financial planning important?
A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a
financial plan in place, you'll be better able to focus on your goals and understand what it
will take to reach them.
One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan
will clearly show you how your financial goals are related--for example, how saving for your children's college education
might impact your ability to save for retirement. Then you can use the information you've gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you'll have the peace of mind
that comes from knowing that your financial life is on track.
Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating
the activities of other professionals who have expertise in specific areas.
Accountants or tax attorneys provide advice on federal and
state tax issues.
Estate planning attorneys help you plan your estate and give
advice on transferring and managing your assets before and
after your death.
Insurance professionals evaluate insurance needs and
recommend appropriate products and strategies.
Investment advisors provide advice about investment options
and asset allocation, and can help you plan a strategy to
Common questions about financial planning
What if I'm too busy?
Don't wait until you're in the midst of a financial crisis before beginning the planning process. The sooner you start, the more options you may have. Is the financial planning process complicated?
Each financial plan is tailored to the needs of the individual, so how complicated the process will be depends on your individual circumstances. But no matter what type of help you need, a financial professional will work hard to make the process as
easy as possible, and will gladly answer all of your questions.
What if my spouse and I disagree?
A financial professional is trained to listen to your concerns, identify any underlying issues, and help you find common ground.
Can I still control my own finances?
Financial planning professionals make recommendations, not decisions. You retain control over your finances. Recommendations will be based on your needs, values, goals, and time frames. You decide which recommendations to
follow, then work with a financial professional to manage your investment portfolio and decide what the best allocation for you age is.
The most important member of the team, however, is you. Your needs and objectives drive the team, and once you've carefully considered any recommendations, all decisions lie in your hands.
Why can't I do it myself?
You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas.
A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.
Staying on track
The financial planning process doesn't end once your initial plan has been created. Your plan should generally be re-
viewed at least once a year to make sure that it's up-to-date. It's also possible that you'll need to modify your plan due to
changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:
• Your goals or time horizons change
• You experience a life-changing event such as marriage,
the birth of a child, health problems, or a job loss
• You have a specific or immediate financial planning need
(e.g., drafting a will, managing a distribution from a retire-
ment account, paying long-term care expenses)
• Your income or expenses substantially increase or
decrease
• Your portfolio hasn't performed as expected
• You're affected by changes to the economy or tax law