Outlining Your Financial Plan

With the New Year upon us, I am reminded of a conversation with a client some years ago. “Bill” and “Doreen” had come in looking for what they thought would be investment advice.

Bill, an engineer by trade, had retired at the end of the year from one of the area plants. He was now trying to make sense of his conglomeration of assets.

As we began our discussion I asked Bill about the last time he had been to the doctor for a physical. That question was followed up with an inquiry about any outstanding health issues. He quizzically looked at me and replied, “You know, I came here for investment advice.”

I assured Bill that I understood this, and responded by telling him he could take my question one of two ways- either I genuinely care about his well-being, or I want him to understand that he is of no use to his family, or anyone else, if he is dead.

My bluntness caught him off guard for a second and then he smiled and proceeded to fill me in on their overall health picture. Bill understood that a discussion about health issues should be part of an overall plan.

Throughout the past fifteen years we have worked with Bill and Doreen. We continue to have discussions about health, children, marriages, divorces, taxes, insurance, etc.

In fact, discussions of this nature should be the heart of the wealth management business for one reason–we have never met a wealthy person who only had “investment needs.”

As such, whether you have wealth or are working on building your wealth—everyone’s financial plan should include regular evaluations of the following:

  1. Managing and understanding taxes. Even if you don’t compile your own income taxes, it is imperative that you have a firm understanding of the tax impacts that different decisions will have upon your assets. Remember, it is not what you make that matters—but rather what you keep net of taxes.
  2. Properly cover risk management needs. We don’t sell insurance. However, we do offer to review our clients’ insurance needs simply because we don’t want them to get wiped out due to something that could have been easily covered. Risk management reviews should include at least home, health, auto, life, disability and personal liability umbrella coverage’s. Don’t skimp—get the right amount of insurance.
  3. Properly coordinate estate planning needs. At least every three years you should review your will, trusts, power of attorney, power of health care and directive to physicians. Give considerable thought to these documents as they must clearly state your wishes when you are incapacitated or dead.
  4. Maximizing retirement plans. There are significant tax benefits to fully funding retirement plans-whether they be IRA’s or 401(k)’s. Furthermore, many employers will match your contributions into a company sponsored plan. Since we have little faith that the government will do an adequate job of saving for your retirement, it is best to be proactive.

The above items are just general topics—but hopefully they will get you thinking about all of the things that require proper coordination in your life. Additionally, financial planning is not about picking the hot stock—it is an evolutionary process that needs to be logically updated and refined on a regular basis.

Given this, set a New Year’s resolution to get your complete financial house in order.

  • Dave Sather

    Sather Financial Group: http://www.satherfinancial.com
    Contact Dave Sather

    President, Sather Financial Group

    Leave a Reply