Saturday, January 2, 2010

What does a financial planner do?

1) He helps clients organize their financial lives. People typically buy investments on a whim, they have no idea what they need to save and invest o meet their retirement and other goals, their insurance coverage is an overlapping hodgepodge.

2) The planner helps people change their behavior. Every investor tends to panic when the market goes down, and there is a strong tendency to buy during euphoric highs. Many people don’t save enough to fund their future goals.

3) Financial planners help people define their deepest and most personal goals, and serve as a general contractor to help them build a better and more fulfilling life.

The Traditional Financial Planning Process

• Establish and define the client-planner relationship
• Gather client data including goals
• Analyze and evaluate the client’s financial status
• Develop and present financial planning recommendations and/or alternatives
• Implement the financial planning recommendations
• Monitor the financial planning recommendations

Notice that this is a process, not a definition.

Financial planning is like doing up a jigsaw puzzle. Without looking at the complete picture, it’s much more difficult to assemble the many tiny pieces in the box. A financial planner guides the client’s focus to the picture to the box. This has nothing to do with which funds to own or what type of insurance to purchase. It has to do with first defining a vision for living life to its fullest. Without the picture that identifies those present and future dreams, there is no visible place to begin a plan. How much money a client has, or the percentage a client is making on his portfolio, has no relevance without the picture on the box. The financial planner will put the paintbrush in the client’s hand, and lend guidance and encouragement as the picture develops.

ABOUT DREAMS.. and how to achieve them.

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