Eight Things You Must Include in a Financial Plan
While many retirees naturally understand what goes into a solid will or family trust, few know what must be in a formal financial plan. A new free guide helps pre-and post-retirees zero in on eight basic elements in a financial plan
St. George, UT (Vocus) April 29, 2010
A free guide entitled: Eight Things You Must Include in a Financial Plan is now available from the Mutual Benefit International Group, St. George, Utah, website: www. mutualbenefitinternationalgroup. com.
Everyone Needs a Financial Plan
Just like a comprehensive will or family trust, people need to give serious attention to in-depth financial planning. Financial planning addresses everything that has to do with money. With your adviser's help, you'll leave no financial stone unturned. Should you refinance your mortgage? Should you buy or lease a car? What should you do with the inheritance from your grandmother? How can you get more tax-sheltered dollars out of your professional corporation? Where do the answers come from? They come from the "subsets" of financial planning -- things like cash flow management and tax planning. The new guide from Mutual Benefit outlines eight areas of focus when preparing a financial plan.
#1: Income Tax Planning
Tax planning actually spans all parts of your financial plan, such as investment strategies, retirement planning, and estate planning. Specifically, you need to make sure you're maximizing all available deductions, exemptions, and credits to minimize your tax bite.
#2: Retirement Planning
How much should you save for retirement? And how will you do it? Is retirement right for you? Your planner will discuss tax-qualified retirement plans-including IRAs, Keoghs, 401k plans, 403b plans, corporate pension and profit-sharing plans. You'll also want to look at non-tax-qualified retirement plans, non-qualified deferred compensation plans, selective incentive plans, and tax shelters.
#3: Estate Planning
You'll start with wills. Trusts. Estate distribution issues. But that's not all. A good planner will help you construct a plan so you avoid estate taxes. Too few people worry about estate taxes. They're
Too far away. Too intangible. But the only way to avoid them is to strategically plan for them today.
#4: Legacy Planning
A good planner will understand legacy planning. A good legacy plan comes from knowing, living, and then planning from your values. You are building bridges that will take you and those you love to greater levels of abundance, purpose and significance. You'll talk about those things that are truly important to you, and then determine the best ways in which to pass those values on after you pass.
Asset Protection
It is imperative to develop strategies that maximize protection of your assets from frivolous lawsuits or creditors in this litigious society. You don't want to spend years saving and growing your assets only to have them taken away by ambulance chasers. Your planner should address ways in which to implement asset protection.
Education Funding
There are three basic sources of education funding: cash flow dollars, dollars from tax savings, and compound interest dollars. You won't want to use cash flow dollars. They're the most expensive. Income tax savings and compound interest dollars are far less expensive -- but require advanced strategic planning. That's what your planner is for.
Investment Portfolio Management
Entire college courses are built around portfolio management. Simply stated, your licensed investment advisor makes sure your portfolio is "balanced." In other words, you need both long-term and short-term investments; liquid and illiquid investments; tax-advantaged and non-tax advantaged investments. As part of portfolio management, your registered investment advisor will discuss the pros and cons of different kinds of investments -- stocks, bonds, money market funds, annuities, mutual funds, real estate, tangibles, limited partnerships, and certificates of deposit, among others. You will look at the whole thing in light of how much risk you can tolerate.
Risk Management and Insurance
There are three basic things you can do with risk: You can avoid it, absorb it, or transfer it. Find out what you can do to avoid risk. Your planner might advise using trusts, family partnerships, or family corporations. He should tell you how to protect your assets from frivolous malpractice
Claims, frivolous creditors, and similar problems. Your planner should also be able to give specific direction as to ways you can absorb or transfer risk.
Not All Financial Advisors Are Created Equal
According to Brock, an adviser's designation gives a senior an idea about the educational background and level of expertise. Designations include Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Certified Public Accountant (CPA), Chartered Life Underwriter (CLU), or attorney (JD), among others. These signify backgrounds in finance, business, accounting, insurance, and law. Remember, however, a person’s background is only one aspect of a deeply qualified planner.
For example, a senior might assume CPAs have greater background in income tax than other professionals. But that's primarily due to their experience, not the CPA designation. The CLU exam has more questions about taxation than the CPA exam? As another example, the ChFC exam is clearly a broader and more rigorous exam than the CFP designation, though CFP is marketed better and is more popular.
“Look for financial planners that have ChFC, CFP, CLU and CPA credentials,” suggests Brock. “Also, talk to some of the advisor’s clients that may have similar circumstances to you and find out how they’ve been helped.”
About Mutual Benefit International Group
Mutual Benefit International Group is the parent company of Brock International, St. George, Utah. It provides 360 degree financial planning and wealth management for financially successful individuals and businesses worldwide. For more information, please contact Hank Brock at 702.979.4761 or visit www. mutualbenefitwealthmanagement. com to download a free copy of Eight Things You Must Include in Your Financial Plan.
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