Financial Planning starts with identifying your personal goals, whether its retiring at age 65 or buying a new home, getting married or starting a new business, it is important to first have a clear understanding of your final destination
Once your goals have been clarified, the financial planners job is to do thorough analysis on how your goals can be achieved using your personal finances. This includes weighing your liabilities and assets, evaluating your risk tolerance, considering your timeline, and assessing any dangers or pitfalls which may arise. For example, if your goal is to retire in 10 years, the financial planner would consider your retirement income and expenses, your current assets and liabilities, your savings habits, and your life expectancy in order to determine how long you will need to stretch your finances in order to have a fruitful retirement life.
In this stage you and the financial planner will work together to develop a strategy that best accomplishes your financial goal. Often there may be a few viable strategies which can deliver to your goal and therefore it’s important to discuss with your financial planner what your personal financial habits are and which strategy best suits your lifestyle needs.
A financial plan is useless unless it’s put into action! In this phase of the financial planning process your financial planner will help you take the precise steps into putting your plan into action. This could mean using investment tools, such as savings accounts, 401k, IRA, investments, Real Estate, etc…in order to build a portfolio which assists you in meeting your goals. It could mean putting together a budget or a spending limit in order to manager your savings habits. Whatever it takes to make sure you are on your way to achieving your goal, this is where it all falls into place
As the economy changes and you grow, your plan will need to be revisited. A good financial planner will help you keep track of your results and check in with you to see if anything has changed in your life which may alter the plan. It’s recommended that a financial plan be revisited at least once a year in order to make sure that things are on track! If you wanted to sail from Los Angeles to Australia you would set the ship pointing towards your destination but it’s important to adjust the rudder once in a while to make sure you are still going to land at your destination. This phase of the financial planning process is as important as any other.
Sam Rad is a Certified Financial Planner in Los Angeles and has a wide range of knowledge about personal financial issues. He has helped many people meet their financial goals through the above process. What his clients appreciate about him is that he is patient, easy to understand and always puts his clients first! Reach out to him if you have any questions.