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Key Elements of a Successful Financial Plan

Setting Realistic Goals

We believe our client must assume ultimate responsibility for setting personal goals. The client must believe in and be committed to the goals or there is greater risk of failure. These goals must be realistic or they will be unattainable. Unrealistic goals can create insurmountable weaknesses in a financial plan and will generally result in the client not attaining financial security. It is our responsibility to expose our client to the possibilities and pitfalls of goal setting. Frequently a client may focus on a particular goal - say investment performance - and overlook the risk inherent in pursuing that level of performance. In developing a plan it is important to identify and prioritize all client goals, financial and psychological, to ensure their most important goals receive the greatest attention and planning.

Planning for Specific Issues

We believe comprehensive planning is the most effective and successful form of financial planning. However, we realize there may be specific issues that need immediate resolution or take priority in the client's circumstances. For example, a client will frequently request our advice about a particular tax situation or funding for a child's education without completing a comprehensive plan which includes other areas such as estate and insurance planning.

While some planning can be "issue specific", we believe all planning should be "client specific". This means planning needs to be focused on the individual client and should not involve the use of "rules of thumb" or "canned planning software". There are innumerable variables that must be given consideration when developing a client's financial plan and, of course, there are basic assumptions that are frequently used - life expectancy for example - but even these should be viewed in light of the client's profile and adjusted where appropriate.

Lifestyle Conscious Planning

Too often planning for financial security becomes narrowly focused on planning for retirement security. Retirement planning is certainly an important aspect of financial security, but it is not the only consideration. Our approach to financial planning encompasses both current and future goals and objectives and its purpose is to ensure adequate assets to provide a comfortable and meaningful lifestyle both now and at retirement.

There are a number of tools we use to provide this balance. We design tax-favored savings programs to more effectively fund retirement goals thereby providing more current spendable income. We will provide tax management of investment and other income annually - remember, spendable income is limited by how much you keep as well as by how much you make. We structure the client's investment portfolio for total return. Investment portfolios which focus on only current interest and dividend income will frequently be inflexible and unable to generate sufficient assets, in the long run, to support both current and future needs.

Capital Needs Planning

"Capital Needs" is a phrase used to describe the amount of assets, either current or future, required to fund a specific need or goal. For example, "How much money must I save to be able to retire at age 60?" or "How much will it cost to send my children to college?" or "How much will my family need if something happens to me?" are all questions which relate to specific capital needs. In fact, much of the financial planning process entails identifying and quantifying your "How much.." and "What if.." questions. The cumulative "capital need" becomes an important element in the financial plan.

The variables used in the analysis must be realistic and appropriate. For example, a conservative estimate of retirement income (Social Security, pension, etc) could tempt you to pursue an investment program with unnecessary risk. On the other hand, a conservative investment plan could result in insufficient assets to retire at your target age. The key to success is a thorough analysis of all the "capital needs" for the individual client. Overlooking even one important need may create serious hurdles for the plan's overall success.

Family Wealth Transfers

Certain financial planning services - investment advice, retirement planning, capital needs analysis - are focused on the "life goals" of the client. After all, the primary purpose of these areas of planning is to provide for their financial needs throughout their lifetime. Almost without exception however, those individuals who have attained financial success come to realize they must also plan for the eventual disposition of their accumulated wealth. In fact, for many clients in their twilight years, wealth transfer planning is the focal point of their financial plan.

We believe wealth transfer planning is more than estate tax planning. There are frequently other issues to be addressed - special needs of family members, creditor protection, business succession planning, charitable interests, and family harmony – before an appropriate plan can be developed. Certainly estate taxes are significant - they are probably the largest, single cost to be funded – but more often than not there are more important family considerations. Our objective is to identify these goals, evaluate the importance of each and design a plan to accomplish them.