What is Financial Planning?
Planning is a part of everybody’s lives. We do it at home when scheduling meals and weekly chores, we do it with our vacations and we do it in the businesses we run. Yet, when it comes to our personal finances, where mistakes can be costly, we often fail to plan.
We may save money in our 401(k)s on a monthly basis, have basic wills signed and filed away, and hire a CPA to do our taxes each year. But when it comes to thinking holistically and strategically across the gamut of personal finances, many people fall short.
Perhaps, you haven’t planned recently because:
You are busy and you will get around to it later…
You’ve worked with a “planner” before and he/she spent the majority of their time pointing to a product they are “encouraged” to sell (annuity, insurance, mutual fund, etc.)
You think you know everything there is to know about portfolio design, insurance, tax, estate planning, etc. (Be careful! We’ve seen very intelligent people make very expensive mistakes.)
You wrestle with understanding what a good financial plan and financial planner is supposed to look like and don’t know where to find one.
What Makes a Good Financial Plan and Planner?
We believe most people need a well-designed financial plan, and it should be received from qualified, independent advisers and planners who can provide objective and personalized advice. Too often we hear from clients and friends about the poor “financial planning” they have received in the past. Typically, these plans were focused on narrow solutions (products and NPV calculations) that failed to understand the entirety of their situation. That’s why an effective plan must consider both the qualitative (family values and vision, personality, preferences, etc.) and the quantitative (savings rate, account values, insurance coverage, etc.) characteristics of the client.
A good planner listens and seeks to fully understand the client and their situation, taking into consideration the quantitative and qualitative items together. Using this information, they help layout goals and aspects of a client’s life and develop a clear path for the client to travel on, seeking to optimize the chances of the client reaching their goals. These recommendations must be made holistically and congruently, understanding there are only so many resources (time, money, and other assets) to go around.
Some of the greatest pleasures I have had at my work involve financial planning. There is true beauty in watching all the pieces come together and sharing our strategic recommendations with clients. When done right, you can see that you’ve relieved some of the stress and burdens of uncertainty from the client. And in the case of marriages, a door has been opened to a deeper understanding and care for the other.
Financial planning is not just about numbers. It includes softer issues, like someone’s concerns or worries, how they were raised, the vision for their family, and their values. We get to understand what brings them joy, as well as the difficulties in their life that burden them. It is a personal exercise that, in our experiences, has provided individuals and families with increased confidence, joy, and communication.
Is a Financial Plan Right for You?
Maybe you are struggling with where and/or how to allocate your own resources and you feel stuck. We understand it can be overwhelming and difficult to know where to even start or how to evaluate your own situation. That’s why when we develop financial plans, we highlight the areas that need the most attention and provide recommendations (and pros and cons) of how to take those next steps forward.
If you’re pondering questions like these as you strive for stewardship and financial confidence, perhaps we at Kings Path Partners can help you strategically plan.
Will I have enough?
How might I be able to prioritize and achieve my goals?
What am I missing that could be costly?
What risks am I exposed to and what can I do about them?
How do I optimize (minimize) my taxes?
How much should I leave to my heirs?
How much should I give away when I am alive?
Are there other estate documents I should have in order?
There are many more questions that could be added to the list. Your life and circumstances are unique, and you should be served accordingly. If you would like to discuss how we might be able to serve you, please reach out to Kings Path at 832-500-3101 or service@kingspath.com to learn more about our financial planning and education services.
