What are the primary subject areas covered by a financial planner?

By Helen Hartman, CRPC®

When individuals are searching for financial advice, there are many areas for consideration. There are many types of financial professionals with differing levels of assistance. One of the most comprehensive approaches to financial advising is financial planning. The primary subject areas which need to be addressed for a concise financial plan are listed below:

1.       Financial statement preparation- The first step in meeting with clients is reviewing the overall cash flow of the household. During this step, the financial planner will analyze cash flow and help determine a budget.

2.       Insurance planning and risk management- Every client should analyze their insurance plan and review annually. Changing circumstances create different insurance needs and it should be assessed and reviewed annually. Insurance planning is a very important piece of the plan as it is used to protect your assets and family.

3.       Employee benefits planning- Many individuals have jobs that provide some type of employee benefits. A financial planner can review these benefits to see how they fulfill needs in the overall financial plan (e.g. health insurance, disability insurance, life insurance, retirement savings, etc…)

4.       Investment planning- The investment plan addresses the proper placement of funds into investment vehicles based on investors future goals, time horizons, and priorities. This step will determine level of risk of investment vehicles as well as liquidity and historical return.

5.       Tax planning- Tax planning is the analysis of the financial picture from a tax perspective. Tax efficiency is reviewed during the step to make sure the items in the financial picture are working together in seeking to reduce the most taxes.

6.       Retirement planning- Retirement planning analyzes the preparation for future retirement. Based on current assets, years to retirement, rate of saving, and historical return rate the financial planner will suggest contribution rates and accounts to pursue the retirement goals.

7.       Estate planning-Generally the last step of financial planning is estate planning. Once the assets have been directed through budget, protected through insurance planning, and allocated to various areas in the retirement plan, the individual needs to anticipate and arrange for the disposal of the assets at the end of their life. A financial planner can guide them to proper titling and placement of assets for disposal upon death.

The seven areas to be covered by a financial plan can be combined to create a complete roadmap to one’s financial future. The plan needs to be reviewed and changed regularly to best approach goals. Most planners will also provide a plan for any one of the subject areas for a lower cost, depending on the clients need.

This article was written by Helen Hartman. She is a Wealth Advisor at Redwood Financial Network and she can be reached at 440-287-5020 or hhartman@redwoodfn.com

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

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