In order to meet your personal and financial goals, you need a plan. So how do you get there? Here we look more closely at how the financial planning process can help assure you the financial future you’re aiming for.
Have you reached a point in your investing and saving where you realize you need to seek the expertise of an outside resource? To get you started, here’s a helpful overview of the financial planning process.
Step 1: Establish a relationship with a financial professional.
Why is this the very first step? Do you absolutely need to engage a financial pro, or can you do planning on your own? It’s true that not everyone needs an ongoing relationship with a wealth advisor, and some have the know-how and diligence to create and stick to a plan without one.
However, DIYing your financial planning isn’t for most. Your finances could benefit from the skill, time, energy and effort a wealth manager can devote. After all, it’s your wealth manager’s full-time job to research and evaluate financial and investment options. He or she will have all the tools and experience available to help you be more successful than you could be on your own.
It’s also his or her job to remain objective about your finances — something that is likely difficult for you to do. You’ll find it incredibly valuable to have someone you can bounce ideas off of, who can keep you accountable, and who will be there to help you make informed decisions.
Step 2: Gather all your financial data and start outlining financial goals.
And on that subject of informed decision making, we move to step two. During this phase of your planning process, you’ll gather all your data and documents, and your wealth manager will get to work analyzing things like your cash flow, assets and liabilities, investments and tax strategies.
You’ll also start outlining your goals (financial and otherwise) and expectations for the future: How do you envision your retirement? At what age do you hope to retire? When do you want to pay off your mortgage? What sort of legacy do you want to leave behind for family or charitable organizations?
Because every individual, couple and family are different, our approach at Ironwood Wealth Management is a highly personalized one.
Step 3: Evaluate your current financial situation in light of your goals.
Here’s where you and your wealth manager will start to align two all-important things: your present financial situation and your goals. Your wealth manager will use software tools to simulate various allocation and investment scenarios based on several factors, including your liquidity requirements, risk tolerance and investment time horizon.
At this point, your financial plan will start to take shape, and it will be almost time for you to review it.
Step 4: Review your financial plan.
Time to see your plan! You’ll meet with your wealth manager, who will present his or her financial planning recommendations based on your short- and long-term goals, your financial status, and the modeling they did. You’ll evaluate the options together.
From there, we’ll make go-forward decisions together about strategy, how to fill possible gaps in your plan, and of course how your assets should be managed (we create an Investment Policy Statement) in light of your financial plan.
Step 5: Implement your plan.
This is where the rubber meets the road: When you and your wealth manager carry out the recommendations and put your plan into action. This step might include transferring assets, coordinating with your CPA, insurance agent, and estate planning attorney (or making recommendations to you if needed).
Step 6: Ongoing monitoring and adjusting of your plan.
The process of financial planning is not a one-time event; it’s a dynamic process. At Ironwood, we believe the financial plan is a living, ever changing document. Life is full of changes and surprises, and these will occur in your own life and in the markets. Re-evaluating your plan, your priorities, and your goals on a regular basis and making necessary adjustments will help you stay on track.
There are plenty of ways your wealth manager can help you do this: tracking investment performance and determining appropriate asset allocation, making sure you’re meeting deadlines and making the most of key tax strategies, and tweaking your plan in the event of a major life change are just a few examples.
Are you ready to create a comprehensive financial plan with a wealth manager that will seek to understand you and help you reach your goals? Contact us at Ironwood Wealth Management today.