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Financial Planning

Step 4 In the Financial Planning Process: Developing and presenting recommendations #FinancialPlanning

By July 31, 2012October 4th, 2016No Comments

The fourth step in the financial planning process is developing and presenting recommendations and alternative courses of action.  Your financial planner should develop and offer recommendations that address your goals, based on the information that you gave her.  She should go over the recommendations with you to help you understand them so that you can make informed decisions.  She should listen to your concerns and revise the recommendations where appropriate.

Most planners will give you a written set of recommendations.  Some will give you a large binder or even a bound book.  There is no uniform procedure.  If your planner or her firm uses planning software, she will likely give you her recommendations along with the software printout projecting your accumulated assets well into the future.

In this instance, the large firms usually give a much more impressive-looking document.  Of course, what it looks like is irrelevant if the substance is too generic, or doesn’t address your issues, or if you don’t understand it.

Your planner should take the time to tell you what it all means.  This is definitely a time where you should ask questions.  The brokerage firm where I worked provided a very polished-looking finished product.  The clients that took the time to review it learned quite a good deal about both their own situations and financial planning in general, and it helped me show my clients their situation and their options.  For those that didn’t even bother to go through it, it was a waste of time and money.

Our firm rarely provides a printout of projections.  We usually use them for specific purposes, such as when we think a client isn’t saving enough.  If we think that seeing the shortfall projected by the software in black and white on the paper printout will help the client to start saving more, then we will show it to her.  Otherwise, we don’t use the projections that go out for the rest of the client’s life.

In many instances I think the planning software gives clients a false sense of security.  To be fair, the software is constantly getting better, and we are likely to see increasingly useful offerings from software providers.  The problem is that you will always have to make assumptions about the future, and many of them will be wrong.  A pretty good financial planning assumption is that change will be constant, and there is no way of knowing what changes will occur in the future.

Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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