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The Ten Most Asked Questions

WHAT IS PERSONAL FINANCIAL PLANNING?

Expert guidance by professionals for the improved coordination of financial decision making to satisfy life and estate needs.  Direction of portfolio (asset/liability) decisions.  Fulfillment of portfolio needs through specific product and vendor choices.


WHY DO I NEED PERSONAL FINANCIAL PLANNING?

To organize your finances in the most efficient manner to reduce taxes, maximize investment return, provide adequate risk management, save time and attain financial confidence.


BUT CAN'T I ACCOMPLISH THAT MYSELF?

Perhaps, but will you?  Most business people and professionals are finding it increasingly difficult to plan adequately for their personal financial growth and security. Among the most common reasons for their frustrations are:

  • Lack of time
  • The wide variety of today's investment opportunities
  • The complexity of ever-changing tax laws
  • The entwining of employee compensation and benefits


WHAT IS TYPICALLY INCLUDED IN A COMPREHENSIVE PLAN?

A plan may range from 50 to 150 pages, based on the complexity of circumstances and the degree of explanation and detail:

  • Cash Flow Budgeting Analysis
  • Capital Management (debt and investment portfolios)
  • Estate Planning and Liquidity Analysis
  • Income Tax Planning
  • Retirement (forecasting benefits, costs and options)
  • Insurance Needs (life, property, casualty and disability)
  • Educational Funding Requirements
  • Employee Benefit Analysis (coordinate personal holdings)
  • Closely-held Business Analysis


WHAT'S MY ROLE IN THE PLANNING PROCESS?

You and your spouse provide information about your personal and family goals, attitudes about taxes, indebtedness, investment risk and security.  Your financial plan will take this information into consideration.  You will also be called upon to update this data at least once each year.


WHAT CREDENTIALS DO I LOOK FOR IN A PLANNER?

Financial planners can have experience in many fields, including accounting, law, banking, life and health insurance, casualty insurance, finance, business management, taxes and investments.

Professional designations include:


  • CFP Certified Financial Planner
  • RFC Registered Financial Consultant
  • ChFC Chartered Financial Consultant
  • CPA Certified Public Accountant
  • CLU Chartered Life Underwriter
  • CPCU Chartered Property and Casualty Underwriter


ARE FEES FOR FINANCIAL PLANS TAX DEDUCTIBLE?


Yes.  Expenses for investment and tax planning are deductible, as itemized expenses, subject to limitations - IRS Section 212.


HOW CAN I MEASURE THE WORTH OF FINANCIAL PLANNING?

After your situation has been analyzed and recommendations made, you will be able to compare clearly your present financial condition with what is projected for the future. The long-range benefits should far outweigh the costs.


WHAT DO PERSONAL FINANCIAL PLANS COST?

Planners usually charge between $500 to $5,000 for their advice, but fees can be as high as $10,000 depending on the complexity of the plan.  Planners generally charge a fee in order to provide an objective analysis.  Yet, clients will still pay commissions when they buy stocks, bonds, insurance policies and annuities.

Since there are commissions associated with the sale of nearly all financial or insurance products, the financial planner may also receive additional compensation in the form of commission on the sale of these specific products.

Some planners still rely solely on income generated from the commissions when clients buy stocks and bonds, and use the plans as a way of generating sales.

A small group of planners charge fees only and handle no products at all.


WILL PERSONAL FINANCIAL PLANNING MAKE ME RICH?

Unfortunately, there are no get-rich-quick schemes that really work.  All the more reason for personal financial planning; it may help you keep more of what you earn and keep your savings working harder.  It does this by:



  • Increasing the productivity of assets
  • Providing capital growth and security for your family
  • Broadening asset structure to reduce risks
  • Providing participation in new investment opportunities
  • Increasing disposable income through tax savings
  • Selecting investment alternatives more carefully
  • Minimizing shrinkage of accumulated assets at time of:
  • Disability
  • Forced Retirement
  • Death