Helping people build and manage their wealth through the digital age.
“In preparing for battle I have always found that plans are useless, but planning is indispensable.” - Dwight D. Eisenhower
As a financial planner, I am hired to create plans for clients geared around their financial lives. Through the years, I’ve noticed that many advisors focus on the delivery of a plan instead of the process of creating a plan. The delivery of a plan provides something tangible to financial advice, which is mostly an intangible service. Unfortunately, this tangible plan typically gets handed to the client, only to be placed into a file, never to be read again. While the plan itself is important, a financial advisor can add so much more value by engaging the client in the planning process. I’ve found that guiding clients through this experience allows them to explore their own fundamental financial values and build good financial habits that stem from their own passions and purpose.
Establish desired goals and outcomes (“Find your why”) - The question that opens the financial planning process is “what do you want your money to do for you?” The answer to this question typically begins with an impersonal or generic response. But when I continue to probe further and ask my clients why that’s important to them, we end up peeling back layers and discover that everyone has an answer unique to them. When going through this process alone, people typically stop at the initial generic response and don’t move further to understand the why. Knowing the why behind your desired outcomes will provide the fuel you need to complete the rest of the planning process and put the plan into action.
Gather data and analyze - Data gathering is crucial in painting a clear picture of the resources you have (or don’t have) and the opportunities that exist. In order to accomplish this you must be open-minded and completely unbiased in your assessment of your current situation. List all of your assets (i.e. investments, savings, real estate, etc.) and all of your liabilities (i.e. debt, loans, etc.) so that you can calculate your net worth.
Assets minus Liabilities = Net Worth
Your net worth gives an accurate assessment of where you are today and it’s what you should use to track your progress moving forward. However, it is difficult for a person to assess their financial health in an unbiased way. Much like the experience of assessing a medical condition yourself by using WebMD versus visiting a doctor, your own lack of objectivity and experience in medicine can lead you to the wrong conclusions. Therefore, it is important to bring in outside finance experts who can help you become aware of the opportunities and possible pitfalls that exist.
Implement - After analyzing and accounting for potential ways to increase your net worth, your time will be wasted if you don’t use your newfound knowledge to take action and implement what you’ve learned. While most people know the importance of taking action, at this step many encounter that “deer in the headlights” feeling and need an extra nudge. When this happens, simplify. There are two ways to increase your net worth:
Monitor - It’s pretty rare to encounter a flawless implementation of a plan, that’s why the need to monitor the plan is so critical. Storms come that can throw you completely off course and it’s crucial to know the direction you must go and react to the new obstacles that present themselves.
“Everyone has a plan until they get punched in the face” - Mike Tyson
Just as a plan is a product of the planning process, your net worth is a product of increasing your assets and decreasing your debt.
When you look back on a carefully executed planning process, it’s impossible to not see your growth. You will find yourself more in-tune with your current situation and have a clear direction on where you want to go. So when obstacles come up, they aren’t a surprise to you, and you can react in a positive way that keeps you on-course to your goal.By taking the time to perform the thoughtful process of planning, you’ve armed your subconscious mind with all the tools necessary to make your vision a reality. Being handed a plan by an app you use, or an advisor you work with, won’t make the inner change or growth that is necessary to achieve a successful outcome.
The reality is that a plan is always changing. If you don’t have the tools necessary to adapt to that change, that plan is worthless. Recognize the value of the inner growth that comes from performing the planning process and you’ll put your mind at ease and be well prepared for anything that comes your way.See an overview of our financial planning process here.
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