Financial Planning as a Process

Financial Planning as a Process
05 May 2017

Oftentimes when I speak with a potential client for the first time, they have one item in mind that they want to discuss.  Typically, this is a pain point that has surfaced recently where they have realized they are out of the depth of their knowledge.  Maybe they have done a great job accumulating money. Now that they have it, they don’t know the most tax efficient way to get to it.  Perhaps they are just looking for a place to start.  I get a lot of questions in the first meeting of people asking me what they should do.  They push over a pile of paperwork and ask for the magic cure today.  Unfortunately, it isn’t quite that simple.  There are a lot of factors that go into the process of creating a plan that give you the highest likelihood for future success.  

Like the Doctor’s Office

Think of it this way.  When you walk into the doctor’s office, you don’t simply ask for a bottle of pills to fix the pain in your leg.  Well, maybe you do because you just want the pain to go away.  But it isn’t likely that the doctor is simply going to write you a prescription without running a couple of tests first.  This could range from a physical examination up to an including an MRI or CAT Scan.  What the doctor does even before ordering those tests is ask questions relating to the symptoms.  All of this is to find out more information about your condition in order to figure out the best treatment options available.  

A good financial advisor does the same thing.  We ask questions about your entire financial situation to make sure that any recommendation is holistic, rather than simply putting a band-aid on a broken leg.  We walk through a planning process, not just a product sales pitch.

Before the Financials

When you are hiring an advisor, there are certain questions that I suggest  you find out the answer to.  You must determine if that person is someone whom you are comfortable with.  Money has a lot of emotion tied to it, good or bad. If their only concern is the amount of assets you are going to give them, walk away.  A true advisor will look at your situation holistically, and not just the funds that you are bringing today.

Keep in mind, they should be interviewing you as well.  They will also be making the determination if you are a good fit for them and their firm.  If not, they should have the courage to let you know.  Don’t be afraid to ask about their current practice and the types of clientele they serve.  They may have a general planning practice, or may have a specialty niche that you don’t fit. It is better to know up front rather than finding out later in the process.


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Getting Organized

Once you’ve decided to work with someone, the true work begins.  This is the gathering of all of the financial data that you have.  Typically, an advisor is going to ask about everything.  There is a saying of “Garbage In, Garbage Out.”  This is particularly true when we are discussing someone’s overall financial health.  Without having a clear understanding of the structure and types of accounts, a planner cannot make an assessment of what needs to be done.

I have found at times that people come in and ask an investment question.  When we begin to dig into the financials, it isn’t a matter of returns.  It is a matter of saving enough to meet their goals.  While they may come to us asking for advice on how to optimize their return, the issues are actually more fundamental.  Increasing debt loads and continually spending more than you make is a bad sign for investing.  In fact, I would argue that if your net worth is continually decreasing due to spending, then you are not a candidate for investing at all.  You need to examine the behaviors and develop a plan to move you out of this situation before looking at investments in the capital markets.

How Long Does It Take?

The amount of time it takes to develop the first draft of a financial plan will depend on the level of complication of your situation.  Sometimes, it can be very simple to organize accounts.  Others will take more time to unravel.  The same is true for subsequent drafts.  A simple situation may call for a relatively simple plan with few moving parts.  A complicated plan with lots of assets may require a larger binder. The best plan is the one that puts you into the position for future success.

If you are ready to get started on your financial life today, we are here to help.  Follow the link to get started.

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Casey Mushrush

Have a question or want to see a post written about a specific subject? Send me an e-mail at I am involved in many of the educational elements of Premier Investments of Iowa, including appearances on WMT Radio, WHO Radio, KXEL Radio, and KCRG Television. In addition, I am a frequent guest host of the Premier Pulse, a personal finance education video blog. I partner with my clients to develop a specific set of financial goals based on their personal situation. We analyze their state of affairs, map out a course of action, and implement a written financial plan based on their own circumstances. We design and implement a long term investment strategy guided by the principles of asset allocation and based on personal risk tolerance. I utilize behavior coaching to help clients deal with the emotional aspects of investing and stick to their long term plan. Additionally, I am responsible for the practice management of an Office of Supervisory Jurisdiction. I aid our advisors by ensuring they are running their businesses in a compliant manner, as well as providing direction and suggestions on process improvement and implementation.