What is Financial Planning?

What is Financial Planning?

What is Financial Planning?

In our experience as a financial planners, we’ve found many people are confused about what financial planning really means. This confusion can cause individuals to mistakenly believe they don’t need financial planning guidance.

Some of the comments we hear include:

  • Retirement is so far away, there’s really no way I can plan for it now.
  • I’ve already retired, so I don’t need financial planning anymore.
  • I’m getting investment advice, so I’m covered.
  • I got a financial plan years ago, so I don’t need a new one.

So what is financial planning?

Financial planning isn’t just for those nearing retirement. It can help answer questions such as:

    • Am I saving enough?
    • If I sell these positions how will capital gains affect me?
    • Should I contribute pre or post tax to my retirement plan?
    • What impacts my retirement more – spending levels or rates of return?
    • Will I be able to save for my future financial independence and my children’s education at the same time or should I prioritize?
    • If I buy a second home now, will I still be able to retire in fifteen years?

Financial planning doesn’t end at retirement, but can help answer questions as you transition from receiving a paycheck, such as:

  • Am I going to run out of money?
  • How does Medicare impact me?
  • Will I be able to afford long term care if I need it?
  • Should my investments be managed differently because I’m now in a different tax bracket?
  • Are my estate planning documents up to date?
  • Can I cancel my life insurance plan?
  • Do Roth conversions make sense for me?
  • Do I need long-term care insurance and, if not, should I put my home in the kids’ names?
  • How do I set up a legacy for my children and grandchildren?
  • When should I start taking my social security benefits?

Financial planning isn’t just investment management.

Investment management is an important part of financial planning, but solely focusing on investments is like going to the doctor with a broken bone and having a general physical instead of an X-Ray. At Legacy, we believe ignoring the planning side of the equation neglects to address the most important element of financial success: your goals and dreams!

Financial planning isn’t just a one-time event.

We view a financial plan as a living, breathing thing. It’s not a binder with a stack of paper that you need to take home and use as a reference for the next 10-20 years. A financial plan is fluid and literally changes day to day as your life changes. For many, handling investments on their own is manageable. My experience has taught me that very few can also efficiently manage the comprehensive financial plan that is tied to those investments, while maintaining a work/life/leisure balance. Expert advice makes a big difference.

Financial planning is the orderly management of chaos. When change occurs, we are able to help manage it.

At Legacy, our goal is for our clients to feel confident about their future and financial decisions. If you’re ready to organize your plan, consider scheduling a complimentary meeting with Legacy. We’d love to help you wherever you are in your financial journey.

Mike Wren

Mike Wren

Mike Wren, CFP®, CDFA® is the CEO, Managing Principal and Financial Advisor at Legacy Financial Strategies. As Legacy’s managing principal, he draws on over 23 years of experience in financial planning.