Financial Planning Process
There is no such thing as a standard "Financial Plan." Each client's situation is unique. Most plans include a Statement of Net Worth and planning for retirement funding. Beyond that, plans can include such topics as: life insurance planning, variable annuity review, 401k review and estate-planning (e.g. will, powers of attorney, trusts). See Financial Planning Topics for a more exhaustive list.
The Initial Financial Plan is optionally part of the Wealth Management process and is billed as a flat fee with 50% down payment and 50% due at the Presentation Meeting. The fee generally ranges from $1,500 to $10,000 and is dependent upon the complexity of the client situation, marital status (married/single), services requested, net worth and income. The fee may be discounted, depending on the size of Wealth Management accounts.
The timeframe needed to complete the Financial Plan depends mostly on how quickly the client can gather the required information and typically ranges from one week to two months.
Below is a diagram of the Financial Planning phases and a description of each phase.
1. Gather detail information and develop goals
Based upon the services requested, WWM develops a detailed list of information needed from the client. Additionally, WWM works with the client to develop goals; e.g. retirement target age, spending plans for new vehicles, home-improvement plans, health care funding in retirement, etc. This normally takes one meeting. This phase answers the questions:
- What is your current financial situation (in detail)?
- What are your financial goals?
2. Review data and goals
The purpose of this phase/meeting is to ensure that WWM understands the client's current financial situation and goals. Typically, this involves a review of the client's goals and Financial Snapshot, which WWM creates based on the information gathered in Phase #1. This phase usually involves one or more meetings; although it may be combined with the data gathering phase/meeting (#1 above) for less complicated cases.
3. Analyze data and develop a Financial Plan
During this phase, WWM goes to work analyzing the client's data and goals and develops a customized financial plan. This might include: determining the best Social Security strategy, determining the earliest the client can retire and getting life insurance quotes.
4. Present the Financial Plan
This phase answers the questions:
- What are the chances of reaching your goals?
- What needs to be done, if anything, to refine your goals?
- What are the next steps? Or, how do we best implement your financial plan in order to accomplish your goals?
5. Implement recommendations
This might include: meeting with an attorney to develop an estate plan, purchasing life insurance, setting up a college funding account for a child or grandchild, or rolling over your 401k into an IRA.
6. On-Going Wealth Management
Typically, the Financial Plan leads into the On-Going Wealth Management process.