FINANCIAL Planning FAQs

Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you save adequately to finance your child's higher education, or it may provide enough for a comfortable retirement. You can also adapt more easily to life changes and feel more secure that your goals are on track.

A financial planner is someone who uses the financial planning process to help you determine how to meet your life goals. The key function of a financial planner is to help people identify their financial planning needs, their present priorities and the products that are most suitable to meet their needs. He or she normally possesses detailed knowledge of a wide range of financial planning tools and products, but his primary role is to help clients choose the best products for each need. The planner can take a “big picture” view of your financial situation and make financial planning recommendations that are right for you.

Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional financial planner if:

• You need expertise you don't possess in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio and revise your asset allocation;

• You don't feel you have the time to spare to do your own financial planning;

• You know that you need to improve your current financial situation but don't know where to start;

• You feel that a professional advisor could help you improve on how you are currently managing your finances;

• You have an immediate need or unexpected life event such as an inheritance or major illness;

• You want to get a professional opinion about the financial plan you developed for yourself.

A financial planner works for you. His or her loyalty should be to the client, not the product(s) he or she is trying to sell. We feel that being truly independent is the best way to give clients objective advice. As independent advisors, we do not have limitations or requirements to use any specific investment product or solution; this allows us to create customized financial plans designed to provide income and growth for our clients.

Create a budget. Determine what you actually spend each month. There are fixed expenses like rent, loan repayments, etc. every month about which we can do little. The variable items such as food, clothing and entertainment are often what get away from us. Use your discretion to contain these variable expenses to start saving.

It is hard to apply a rule of thumb toward savings, because it varies with age and income level. Ten percent is a good start. If you find that is too high for you, don't let that deter you. You can start by putting a little aside each month and then slowly increasing it.

Financial planning is a common-sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results.

Consider a visit to your doctor. Without complete and fully accurate details, your doctor cannot prescribe the best course of action. The same applies to financial planning. In order to obtain the best service for your “financial health,” all details and specifics must be disclosed.

Typically, information regarding investments held, number of dependents, income and expenditure details, savings and financial planning needs, etc. The more accurate information you give, the better the quality of advice given.

A financial plan should include a review of your net worth, goals and objectives, investment portfolio, cash flow, investments, retirement planning, tax planning and insurance needs, as well as a plan for implementing your goals.

Evaluating your insurance needs is part of personal financial planning. Insurance takes care of your unpredictable needs, and because these needs can arise at any time, insurance is extremely important. Investments take care of your predictable needs and ideally should follow after your unpredictable needs are addressed. The insurance industry has changed a great deal over the past few years, and there is a whole array of new products from LIC as well as private insurance companies.

It is important that financial plans are tax efficient. Your financial plan should help you in minimizing your tax liability and maximizing your after-tax returns from your investments. Some financial planners help their clients in preparing and filing their tax returns.

The best plan is useless unless it is put into action. Your financial planner will assist you completely in implementing the plan, if and when you desire.

It is good to review the plan when there is a lifestyle change such as marriage, birth, death or divorce. Any change in financial position should be evaluated as well. Most people have an annual update that reviews how the plan is being implemented. The review also considers changing goals and circumstances.

That depends on what you need. We have provided a questionnaire for you to fill out. Based on your responses, we will be able to prepare a financial plan customized for you. If you require a more detailed session with a financial planner, please call us at 847.268.3670, or email us at info@pfswm.com.