Broker Check

Do You Have a Plan?

November 07, 2022

October was financial planning awareness month.  In a recent study from a collection of firms, it was estimated that only 27.8% of American households have a formal financial plan.  If there was ever a year to prove that building a financial plan and having a financial planner to lean on is a smart move, 2022 is the year.  Simply having a sounding board while financial markets have been in turmoil can be invaluable.  There is so much noise in the media on a daily basis it’s almost impossible to sift through it all and understand what’s true and what’s not. 

One thing I have found is most people equate financial planning to just investment management. The reality is that a good planner who provides true financial planning will help you in a wide array of areas.  Budgeting, saving, retirement planning, college planning, insurance planning, estate planning, investment management, tax management, asset location and asset allocation are just some of the many areas that a good planner will address with you. 

Vanguard released a new whitepaper in July 2022, re-evaluating their famed 2001 study of “advisor alpha.” In this paper they discuss a model of 7 different parts of the wealth management framework where an advisor can add significant value to a client.  In summary, they determined that having an advisor can add up to a 3% or greater return than one can achieve on their own.  The 7 pillars are located below:

One thing I have learned over 12 years of personal financial planning is to expect the unexpected.  As we all know, life constantly throws curveballs at you which can greatly impact your finances and your family.  My company is named “Birds Eye” for two reasons.  First, it’s a play on my name but second, and more importantly, we begin the evaluation of your finances by taking a “birds eye view” of your finances.  What does the overall picture look like from 30,000 feet?  From there we discuss your goals, both long and short term, your dreams vs. your needs and eventually establish priorities.  From that initial “birds eye view” we drill down to the smaller details based on priorities we have established.  Are your investments in line with your priorities, particularly as it pertains to risk and time?  Are your assets in the proper location or are we not taking advantage of tax opportunities?   Is your plan self-completing to ensure your family is protected? Is your budget in line with your income or are there ways to become more efficient?

Financial planning should be a conversation.  No advisor should ever walk into your house with a product or a strategy before they have gotten to know you.  The back and forth needed to get to a true financial plan is invaluable as it leads to a relationship that can be something you fall back on during times like 2022.  So if you are, or if you know someone who is part of the 70+% that does not have a plan or a planner, I would encourage you to start the conversation.  Whether it’s with me or with someone else, it could very well prove to be life changing in times like these