Planning for the future begins by understanding your current financial situation and then identifying your goals, wants, and wishes over your time horizon. One software tool we use is MoneyGuidePro®. This short video provides a glimpse into the software and how it helps:
MoneyGuidePro® Software Overview – Client Version from MoneyGuidePro on Vimeo.
The planning process starts by engaging with a financial advisor in a 12-month process. During this time you will meet a couple of times in the beginning stages and help the advisor assemble needed financial information in order to have an accurate assessment of your current assets (such as home, savings, CDs, 401(k), 403(b), IRA, 529 plans, brokerage accounts, and annuities) and liabilities (mortgage, student loans, car loans, credit card debt).
The next phase focuses on goals which are prioritized according to needs, wants, and wishes. These include basic needs to manage your yearly budget and can include goals that you must be able to fund in the future. Wants and wishes are goals that are less important than basic needs but that are still important to your plan. Whether it is yearly vacation travel, a celebration, or a second home, we incorporate it into the plan.
Once the goals are identified, we analyze current savings and retirement plans, debt, projected Social Security and other income sources. An important component of this process is the analysis of investment portfolios and the use of asset allocation models to provide a growth rate estimate to determine whether the goals can be funded.
The powerful financial planning software we use helps to account for many moving parts such as inflation rates of the cost of living, education, and health care. It also incorporates tax laws concerning taxable, tax-deferred, and tax-free investments.
The end result of a financial plan is a working model that can help the client and advisor work together to plan for the future. It is a living model that can be adjusted as needed to address changes in the lives of clients. A financial plan brings clarity to clients and provides an excellent foundation for making decisions to live a better life.
Financial planning requires asking the right questions and organizing the information into a model that can project into the future. As a trained anthropologist and financial planner, Scott Hill, owner, is compassionate, understanding, and skilled in the kind of holistic thinking that is necessary for creating and making a financial plan.
A financial plan attempts to predict how likely the client’s investments and income, including Social Security, pensions, and investment income, will last throughout the plan.
In order to estimate growth rates of investments, growth rates are based on a series of indexes that align with how current assets are allocated across various asset classes (such as savings accounts, CDs, fixed annuities, large-cap growth stocks, large-cap value stocks, real estate, and bonds).
Once current asset allocations are documented, we work with the client to establish a proposed asset allocation model that is aligned with the client’s risk tolerance and time horizon.
Once the financial plan has been constructed, the client and advisor work together to assess the effects of various changes to the plan. This enables us to explore “what if” scenarios and how they would affect the likelihood that the plan will succeed. These changes help to test the robustness of the financial plan and can help with decision-making.