Personal Financial Planning
Personal Financial Planning is the systematic analysis of your current situation. Uncovering deficiencies that will detract from where you want to be financially in 5 years, 10 years, 25 years, 30 years and resolving those deficiencies. The advisor's job is to understand who you are, what you want and where you want to go. Your job is to tell your advisor what you want. How soon you want it and what you are willing to do to achieve it. Honest understanding your current situation is the key to a good plan! Obviously this means choosing the Right Financial Professional for you. Sometimes financial advisors have to tell clients things they're not happy to hear But once heard they can be corrected Deficiencies need to be uncovered, addressed, resolved Case Study OneI met with a client and his lovely spouse. They both worked, earned good incomes and had four children under age 12.This client had “less then needed Life Insurance coverage” with a small whole life insurance policy on himself and 3 more on 3 of the 4 children. There none whatsoever on his spouse and the last child. This was a perplexing and seemed an odd arrangement. Why was his spouse and child not insured? Where they un-insurable? No! The client--simply couldn't afford higher insurance premiums. The agent who sold the insurance had for what ever reason done a poor job We reconfigured the insurance coverage to include everyone and it actually cost less than the previous coverage. The fundamental basis of Personal Financial Planning is the proper amount of affordable life insurance! Incorrect life insurance is worse than than NO life insurance! Here's why: If you have no Insurance. You know you have no insurance and understand if die prematurely your spouse and children will NOT have the benefit of a tax-free lumps sum payment to continue their lives. Having the wrong insurance coverage can give you a false sense of security -- letting you think you have something when you don't! Personal Financial Planning manages risk. See risk management. Case Study TwoI met with a very nice couple. Their previous advisor had sold them a very inexpensive joint Life Insurance policy (as part of their financial plan). Which they were quite happy with and they were certainly not interested in making a change.Until they learned it was a joint-last-to-die policy. Meaning--they both must die--for the policy to pay. What they thought they had was coverage that paid one if the other one should die. They were appalled, but thankfully we discovered the deficiency and quickly fixed it. Understanding Deficiencies We all engage in a form of financial planning--even if it's just paying the rent and buying groceries. If we don't receive our pay-cheque, we can't pay the rent and buy the groceries. That is a surprise "Deficiency. We need to understand where we are in our financial lives and where the deficiencies lay. Hidden deficiencies can play havoc with Non-existent, inadequate or just plain wrong:
A good plan identifies deficiencies. Deals with them and sets up guards against them reoccurring. That’s what setting financial goals is all about and why setting them is so important. "Wealthy people don’t get wealthy by accident--- THEY Plan on it." Personal Financial Planning is individually tailored for each person and situation (See the importance of financial planning ). Tell me where you wish to go. I can draw the map showing you how to get there. spending no more then what you already spend Once established--what you want--that’s when we discuss the vehicles you use to get there (the investing part) If you don't have your own plan you are part of the government's plan and that plan looks after the government not you! Return From Personal Financial Planning to Home
Terry Johnston CFPJ C Mitchell Financial Services Inc. Phone: 866-721-7781 ext. 232
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