Breaking Down Financial Planning in 3 steps

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Financial Planning” is another one of those terms the financial industry uses a little too loosely. Banks, brokers, and mutual fund and insurance agents all use the word to market their services. Unfortunately, this causes some people to wonder, what exactly is financial planning?

Typically, financial planning is a comprehensive plan developed after careful examination of various parts of a person’s life such as, investment planning, retirement planning, asset allocation, life insurance, health insurance planning, and many more. Ideally a financial plan should be derived from a fiduciary, fee-only financial advisor who acts in the best interest of the investor and doesn’t receive commissions on products sold. After years of experience I think we can shed more light on the term and give you a fresh perspective on what exactly financial planning is.

Financial planning is not about calculations, returns, and guessing what the market will do.

Many investors think that financial planners, advisors, and wealth managers have the ability to predict what the market will do to help them attain higher returns. To be frank, we have no idea what the market will do because we can’t see the future and neither can the analysts on CNBC, CNN, or any other media outlet or consultant.

We know how the market works. It goes up and down but over the long run it goes up and we know the importance of structuring a well diversified portfolio to better withstand market volatility. But, financial planning isn’t necessarily about the returns your financial advisor is helping you attain, it's instead about you. Financial planning helps investors develop the right kind of mindset surrounding their finances. The process allows investors to get 100% honest about their money and strengthens their understanding and discipline level as an investor.

Financial Planning is Long Term

Organizing and planning your financial health doesn’t happen over night. A solid financial plan happens over many years of education, execution, and discipline. Each situation is unique especially when combing through the details of an individual or family’s financial picture. It’s important to remember that a plan only works if you’re willing to participate fully and stick with it long term over the course of your lifetime. 

 Financial Planning is all-encompassing

We don’t just look at one aspect of your financial picture. At True Measure, when people initially start with us, we require that they’re 100% honest and upfront about the details surrounding their finances. A doctor wouldn’t treat anyone without looking at their medical records and attaining a clear understanding of their patients past history and current health. In the same regard, we won’t provide advice until we know what the whole picture is. This can be difficult for some investors to understand. “Why do they need to know all the details? I don’t want to share everything. I’m slightly embarrassed by my credit card debt.” This is all normal. But in order for our relationship to continue then individuals must participate in the planning process with us and be willing to confide in us the necessary information we need to advise them. This gives both you, the investor, and us the best chance for success.

Financial Planning is comprehensive. It is not about products, returns, or predicting the market; it’s about you, the investor, and what’s best for your family’s future and financial health. It’s also about feeling confident in your financial nest egg and knowing that you have enough.

 If you found this article helpful, be sure to also check out “Why We Love Wealth Management” or visit our blog for more investor insights.

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