Not everyone needs a financial plan. But, it will be important to your future if:
- Your financial affairs are poorly organized;
- You are facing some important financial decisions;
- There are significant gaps in your financial security;
- You need help planning for your child(ren)’s education;
- Taxes are overly burdensome and you need legitimate relief;
- You need to clarify and define your personal and financial goals;
- You are not making progress toward achieving your financial goals;
- You have philanthropic interests you would like to know how to fulfill;
- You have complicated issues surrounding the settlement of your estate;
- You are overspending your income and not saving anything for the future;
- You need an investment strategy that will work for your surviving spouse;
- You need help deciding about retirement plan opportunities and contributions.
Most likely, neither you nor your spouse has the time—or perhaps the interest—to attend to the daily details of investment decisions. Since a change in one aspect of your financial affairs has an impact on everything else, a comprehensive financial plan looks at your goals and all aspects of your personal and financial situation and builds an investment strategy to satisfy all of your needs.
The financial planning process is very straightforward:
- Your job is to think through your goals. Our job is to help you refine and clarify them.
- Your job is to gather current information. Our job is to collect and analyze it.
- Our job is to do research and provide you with valid information.
- Your job is to meet with us. Our job is to give you meaningful feedback.
- Your job is to ask questions. Our job is to make suggestions and recommendations.
- Our job is to offer viable alternatives. Your job is to consider those alternatives.
- Your job is to make decisions. Our job is to help you implement those decisions.
The purpose of a financial plan is to provide a road map to take you to your financial destination. The development of a useful and workable plan has two prerequisites:
- Complete and correct information about your financial situation, and
- A clear definition of goals and a schedule as to when you intent to have them realized.
While you need to indicate your reactions to proposed alternatives as the plan develops, you also need to be committed to implementation of the plan when it is completed.
Our approach to money and wealth is a comprehensive, planning approach. You have undoubtedly been solicited to buy a phone service, to buy insurance, to give to some worthy organizations, to invest your money in an unbeatable enterprise—as though each investment is unrelated to the others. These solicitors, it seems, are so interested in your money that they don't care whether you can afford to buy their product, that the product is appropriate for you or that you use good judgment in deciding whether to purchase it.
Financial planning addresses those issues: it helps clients clarify their priorities and make judicious decisions that will be in their best interests for years to come. Financial planning presumes that a financial plan will be designed as a guide for future action and that the action taken will be in the purposeful implementation of the plan. The plan can be simple or elaborate but is essential for the coordination of various parts of the client's overall financial strategy.
Many plans are far more voluminous and complex than they need to be. It is not uncommon for a plan to be completed and then to sit on a shelf, not implemented. And, when a plan is implemented, the picture changes immediately—and requires new statements indicating those changes. It is appropriate that a new, though shorter, plan—containing revised projections—be prepared as a guide for the years ahead.
Occasionally, the tail wags the dog and the financial planner acts as sales person first. It's tempting to cut to the quick; we've seen it happen many times. Financial planners need money coming in, just like anyone else. The problem comes when financial planning is bypassed and the sale becomes paramount. Our approach reduces that risk:
- Be completely honest with the client.
- Share our knowledge to the extent the client wishes to know.
- Be sure the client understands his or her situation
- Be comprehensive in reviewing the client's situation.
- Consider alternatives.
- Provide written documents describing the client's position, the alternatives, and the recommendations.
- Give reasons for our recommendations.
- Include other professional support where appropriate.
- Work with the client to find the best solution.
- Assist with implementation.
- Look for client satisfaction through referrals.
- Work primarily on the basis of fees and recommend products that incur a commission when they represent the best alternative (we disclose those commissions at the time of our recommendations).
It is not our practice to make recommendations that are contrary to the interests or preferences of our clients. At the same time, it is our responsibility to caution clients about risk and incompatibility and to render our best judgment. Financial planning is a process, a process we pursue using commonly accepted guidelines.
These are the guidelines we follow in the planning process:
- Help clients realize their goals and resolve their financial problems under a fee for services arrangement.
- Make recommendations only after obtaining a clear statement of client goals and priorities, a careful analysis of issues and problems, and a consideration of meaningful alternatives.
- Make no recommendations that are inappropriate to the client's needs and circumstances.
- Provide a well-reasoned and written rationale for all primary recommendations.
- Disclose all forms of compensation relating to the professional-client relationship.
- Initial compensation is generally in the form of planning fees as provided under a written advisory agreement.
- Compensation for ongoing services is ordinarily derived through a money management agreement covering assets under management.
- All such agreements may be terminated at any time by either party.
- Respond to client calls and inquiries as quickly as possible.
- Coordinate with the client's other advisors (e.g., attorney, accountant) as deemed appropriate by the client.
- Network with other professionals whenever a condition or recommendation is in doubt.
- Include other family members in the planning and discussion process (including educational sessions) to the extent appropriate and desired.
- Support the client in the selection of money management alternatives based upon stated criteria.
- Provide continuing support and follow-through based upon a written agreement for services.
- Hold periodic conferences with the active client to review the status of all accounts and to make appropriate changes as warranted by changing circumstances.
- Decline personal receipt of, or control over, client funds at any time.
All checks for the purchase of securities, whenever written, are made payable to Pacific West Financial Consultants or to the selected investment company(ies). Checks for investment advisory services shall be made payable to Pacific West Securities, Inc. or to the associated advisory company. Checks for insurance products are written to the insurance company itself. Checks are never made payable to John Shellenberger or to Estate Conservation Associates.
A financial plan consists of several necessary elements:
- Cash Management,
- Risk Management and Insurance Protection,
- Income Tax Planning,
- Retirement Planning,
- Estate Planning, and
- Investment Strategy.
Optional elements of a financial plan include the following:
- Educational Planning for Children,
- Planning for Specific Ventures or Acquisitions,
- Business Planning and Strategy,
- Legacy Planning, and
- Real Estate Investment Strategy.
Each section of the plan should consist of several parts:
- Current Resources,
- Goals and Objectives,
- Non-financial Considerations
- Alternatives: Opportunities and Obstacles,
- Testing: Impacts on Other Aspects of Your Financial Plan, and
- Conclusions and Recommendations.
Be prepared to spend several sessions with your financial planner or advisor. The first session should be spent getting acquainted, exploring your objectives and financial needs (or wants), and drawing a complete picture of your financial resources. The second meeting will be used to confirm what you reported in the first meeting and explore some courses of action. The advisor may illustrate the consequences of certain approaches to your situation and ask for your input and response. The third meeting allows the refinement of alternatives and presentation of a draft plan for your comment and review. At the fourth meeting, you will be presented with the final plan and given the opportunity to launch its implementation.
In some cases, it is reasonable for this schedule to be accelerated. In other cases, it may be drawn out for additional sessions. In a marital situation, it is desirable that both spouses actively participate. For certain aspects of the planning process, your advisor may want to have a joint meeting with your other advisors: your attorney, your accountant, and others as appropriate.
Remember, a satisfactory plan is one in which you have had plenty of input and which represents your intellectual and emotional needs. Your advisor is just that: an advisor, not a take-it-or-leave-it authority. The decision to implement the plan is yours and you must be satisfied that it represents your best course of action.
Implementation is the necessary but not final step to make the plan work for you, justifying the expense you have incurred to develop it. Don't get cold feet. You have worked on your plan for several weeks—it is time to move. Ideally, all of your questions will have been asked and answered prior to the moment of implementation; but don't let questions at the end of the development process bring you to a halt. Muster your courage to go forward—even while getting answers to new questions. Time works against you. The longer you take, the less likely you will be to implement you financial plan and the more likely you will lose the money, time and effort you invested in its development.
If you would like to find out if a financial plan is the right tool for you, please contact us. To expedite the process, you may wish to complete the Investment Experience & Objectives Questionnaire on our Financial Planning Forms page.