Financial planning meetings are opportunities for both spouses to ask questions and confirm their financial plan.

During a marriage, many of the household tasks are divided. Finances tend to be one of these tasks. One person takes care of them, and the other pays little to no attention to it. In some cases, one spouse handles the daily money chores of buying groceries and clothes for the kids. The other manages the investments, including the retirement accounts.

There are a number of reasons why the non-financial spouse doesn’t deal with the money or investments.

In the US, money management is still considered to be included in the “male duties”. There’s no particular reason why men have to deal with the money, but it’s often the case. Over half of married women report leaving the dollars to the “dudes”. Surprisingly, millennials are most likely to do so.

Sometimes people never learn how to deal with their finances. Now they’re afraid, either of money itself or that they would make the wrong decisions. Some consider it all a numbers game, and they don’t enjoy dealing with numbers. Or they just find finance boring.

Whatever the reason, both members of a couple should attend the meetings with their financial planner.

When you attend the financial planning meeting, you get to know the financial planner.

Most fee-only fiduciary planners (like the ones at Platt Wealth Management) are looking for long-term relationships with their clients. They want to get to know their clients better to ensure the financial plan reflects the reality of the household.

Even if one spouse doesn’t manage the money for the marriage, they’re still one of the decision-makers in the household. Their questions and tastes should also be reflected in the plan. Good financial planners want to find a balance between risk and reward that satisfies the household. If one is very aggressive and can handle a lot of loss on paper, and one can’t, then the conservative spouse is in for a lot of sleepless nights!

In the past financial advisors sold products on commission, and they were interested in buying and selling stocks to generate those fees. That’s not how it works anymore, and financial planners specifically are focused on the plan and not the products.

Not only do fee-only planners avoid selling products, they don’t want to. They want their clients to be comfortable enough not to panic when the market drops. Whatever questions need to be asked so that doesn’t happen, they’re happy to answer.

Attending financial planning meetings together means a higher chance of success for your financial plan.

Honestly, there’s no use spending all the time and energy to come up with expenses and goals for a financial plan if you’re not going to implement the steps necessary.

Usually a plan requires some work on the client’s part to reach their goals. There may be things the planner recommends outside of the investments.

For example, one or both of you may need to max out your retirement contributions. Or change investments inside your 401(k). Or pull back on current spending to make sure that you have a comfortable retirement.

If you don’t accomplish these things, the plan won’t work. But in order for the steps to be carried out, both partners need to agree to them.

You may find that your idea of retirement or legacy is quite different from your spouse’s. It would be very helpful to know that ahead of time! Your planner can help you figure out what your mutual goals are so both of you commit to making them possible.

That can’t take place unless both of you are in the discussions. Neither of you wants to sacrifice for something the other person wants but you don’t. To make the plan work, you’ll need to come together as a team. One spouse avoiding the plan development isn’t the right answer.

Attending financial planning meetings together means both spouses will feel prepared if they find themselves alone.

The truth is, most women will have a period of time when they’re the only money manager in the household. Although women tend not to handle the finances in a heterosexual marriage, it’s especially important that they have a grasp on the overall financial picture. You may be used to having your husband deal with your money.

But what happens when they aren’t able to make decisions for you? Or you don’t want them to?

 No one gets married planning to split up later, but divorces do happen. The fastest-growing demographic for divorce is those over 50. In other words, it can happen to you. Which doesn’t mean it will.

It’s not just divorce that affects who manages the money. Given that women tend to outlive men, there’s a good chance you’re going to outlive your husband. He might also be incapacitated, even briefly, by an accident or something else.
Wouldn’t it be a smart idea to be prepared? Avoid struggling with the finances on top of everything else if something happens.

It would be a relief to have one thing you didn’t have to worry about because you already knew and trusted your planner. The easiest way to do that is to go to the meetings and develop a relationship with them.

Have you and your spouse scheduled your financial planning meeting yet? If not, please email us or call 619.255.9554. We’re excited to talk to both of you about planning for your future!

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

We put together a quick honey-do and tips list for February tax and romance deadlines.

It may seem contrary to think of Valentines Day and Tax Day at the same time, but for financial planners, it makes perfect sense. Whether you are single or together with someone, you want to have a feel-good plan for that romantic holiday, and the same goes for the IRS. If you want to have a smile for tax day, that means getting started on important deadlines now.

Tax deadlines and romantic tip #1: Get started early.

Although it’s not March yet, now that you’ve received (and/or sent out) your 1099s, consider getting your taxes done. Or as much as possible, if you’re waiting on K-1s or other tax reports that take longer to reach you.

The earlier you get your taxes done, the less likely it is that someone will file a fraudulent report using your tax ID and collect a refund. Here are some more tips on avoiding what’s called “tax identity theft”.

You can get started early for Valentine’s Day. Planning takes research, collaboration, organization and action.

1. Research and reconnaissance.

2. Gift shopping and wrapping. Rough draft of love letter.

3. Reservations and confirmations of scheduled events.

4. Final draft of love letter.

5. Enjoying time together.

Tax deadlines and romantic tip #2: Get the right data.

Your gains and loss report is an important component to your tax return showing the amount of capital gains tax that you may need to pay. As a reminder, tax is owed on the gain if you sold any securities: the difference between what you paid for it (basis) and the price you sold it.

If you sold at a loss instead, use it to reduce the amount of overall gain, and pay less in tax. If your losses exceed your gains by more than $3,000, you can carry them forward into future tax years to offset future gains as well.

A realized gain/loss report provides you with the information about the gains and losses you “realized”, which are what’s taxable. Your unrealized gains and losses are only on paper and won’t become taxable until you sell them.

If you held the security for at least one year before selling, you’ll be taxed at the capital gains rate. This tax depends on your income; those earning less than $78,750 (married filing jointly) pay no capital gains tax. Between $78,750 and $488,850 the tax is 15%, and for those earning over that amount it’s 20%.

Securities held for less than a year are subject to the short-term rate, which is the same as your marginal tax rate.

We also advise getting reliable data ahead of Valentines. Are you sure your romantic partner wants chocolate and a card? Do a little research. Listen closely to your significant other or get together with friends for a brainstorm. Find out what they really want to do. Make Valentine’s Day unique to you. From our own research, cards are out and vacations are popular.

Tax deadlines and romantic tip #3: Be generous.

Companies can capitalize Valentines affectionate glow. Bring in breakfast or pass out custom candied hearts with branded encouragements. If you want to show more love, let staff out early to spend time with family and friends. Go big by increasing your company contributions to employee corporate pension plans.

Employer contributions for partnerships and S-corps are due by March 15 (unless your business is filing an extension).

Checks must be received by April 10th if mailing to PWM. Checks should be made payable to the custodian and reference the account number and tax year in the memo section.
If mailing directly to the custodian, it must be received by April 15th.

Wires and ACH contributions must be in the account and posted by 1:00 pm PST on April 15th. Clients should not wait until the last minute to send in the wire or ACH due to the volume of requests. The custodian may not be able to post the contribution until after the deadline.

April 15 is the deadline for C-corps and sole proprietorships, unless you file an extension. In general, the contribution is due by your filing date.

Otherwise, if you’re filing extensions, the due dates are September 15 and October 15, respectively.

If you would like to open a new corporate pension, please give us a call. You will need to get new account paperwork to us by March 27th.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

For those who are compensated partially or mostly in equity – as opposed to simply earning a salary – it’s important to plan for vesting, exercise, and sale. The tax code regarding equity compensation is fairly complex. Which means stock options provide opportunities for investors if the planning is managed correctly.

Equity compensation is an important component of your financial plan.

Similar to selling a business, you want to plan for these eventualities instead of allowing circumstances to determine your actions. That way you’ll take advantage of the opportunities that are open to you, in the time frame when they’re most tax-advantaged.

Equity compensation is just as important an asset as a house or other investments. It should be analyzed and folded into a comprehensive plan just as other assets are.

Because your equity compensation is in one stock, it creates a diversification problem if you don’t have a financial plan. If your investments are spread out among different accounts, it may be difficult to judge how much of your wealth exactly is concentrated in one stock. Developing a financial plan will help you gauge where you need to diversify.

In addition, many of the advantages of these types of strategies are embedded in the tax code. Developing the right strategy includes taking the opportunities provided by the tax code while marrying the shares with the investment plan. A financial plan with a qualified CFP® professional can help you achieve tax-advantaged wealth.

Equity comp isn’t just for startups, though it certainly applies to them as well! There are large firms all across the US that pay senior executives in equity. Whether the company is large or small, or the compensation itself is large or small, a financial plan that includes these assets is more of an asset to you, especially in regard to your retirement planning.

Type of Equity Compensation: Stock Options/Restricted Stock Units/Employee Stock Option Plans

Tax treatment varies across all these forms of equity compensation. Stock options may be Incentive (ISOs) or Non-Qualified (NQSOs). The timing of vesting, exercising, and selling the shares all must be done within certain limits to ensure their benefits are maximized.

Depending on the amount of these types of stock options, they may result in a concentrated position for the investor. Including these in the financial plan allows the financial planner to coordinate the asset allocation for the portfolio.

The plan will also take taxes into consideration. If you sell your $1 million in revenue accounting firm for its expected 1.2 times, your bank account isn’t going to balloon by $1.2 million once you take taxes into account. You’ll end up with substantially less with a cash payment upfront.

Equity Compensation Strategies: Net Unrealized Appreciation (NUA) and 83(b)

NUA strategies involve a tax-advantaged strategy for taking appreciated employer stock from the company’s retirement plan. The difference between the cost basis of the shares and the stock price at distribution is the net unrealized appreciation. Ordinarily the immediate sale of the stock results in an ordinary income tax on the difference. This can be significant for highly appreciated stock.

When the employee takes a lump-sum distribution with an NUA strategy, net unrealized appreciation is excluded from income. Tax is deferred until the company securities are sold. At which time they’re taxed at the long-term capital gains rate, instead of ordinary income.

This strategy has to be balanced against the risk of holding these securities long-term for a concentrated position.

Including the analysis in a financial plan will show the difference between taking the ordinary income hit while diversifying, and having a concentrated position for some period of time. But selling later at capital gains rates instead.

The 83(b) election is an opportunity to pay taxes on the value of shares when granted.

This may be especially valuable for startups, when the fair market value is likely to be lower. Otherwise the shares are taxed when vested.

If the company’s shares are growing, it’s best to pay taxes at grant. However, if the company’s shares decline, then it would have been better to pay at vesting instead.

Minimize the Risk of Concentrated Equity Holdings

Depending on how much of your compensation is in the equity of your company, you may be able to diversify away from this position in other accounts. Such as your regular taxable account or even your retirement account. Your financial plan will show how much needs to be peeled off from company stock over time in order to achieve the portfolio’s target allocation.

However, some firms require that their senior people maintain a certain amount or percentage of the portfolio in company stock. Or, you may be new to financial planning and simply have allowed the shares in your company to accumulate to this point.

Whatever the reason, your portfolio may be concentrated in one stock. A good financial planner can help you minimize the effects of holdings and take into account the cost of hedging. If possible, the planner may be able to set up a 10(b)5-1 plan that allows the regular selling of company stock, for certain officers of a company.

Equity Compensation: 10(b)5-1 Plans

At the top of the organization chart, there’s a tension to be managed. Ensure that the leaders of the company have sufficient “skin in the game” so that they’re incentivized to grow the stock as much as possible. Also make sure each officer can maintain a  sufficiently diversified portfolio.

Because the stock sales of certain eligible executives can be made public, it’s key for a healthy business to ensure that these sales don’t tank the stock price. It also protects the execs from accusations of insider trading. They can show that the stock sale was made in accordance to a plan filed with the appropriate regulators, for the purposes of diversifying their own portfolios.

The instrument for this is the 10(b)5-1 plan, named after its section of the tax code. Including it in the financial plan means that the stock sales will not adversely affect any other financial moves.

It also allows the planner to ensure that the portfolio’s targeted allocation will be reached in a certain period of time, by the scheduled sale of a concentrated stock position.

Executive Deferred Equity Compensation Plans

As with so many of the equity compensation strategies discussed here, timing and concentration of stock are key factors in deferred comp strategies. Technically 401(k) and pensions are deferred compensation plans too, but they are qualified plans administered by ERISA. Here we are referring to nonqualified plans for executives only.

The company sets aside a guaranteed amount of income for the executive, usually with provisions to pay out early if they’re disabled or die prematurely. It’s a good retention strategy to keep key employees at the company. Certain conditions must be fulfilled in order for the executive to claim the compensation at retirement.

However, as they’re not subject to ERISA, these plans do carry the risk that all the assets in the plan may be lost. Employees who are counting on this money at retirement could end up with an unpleasant surprise. That’s why it’s key to consider this as part of a financial plan, so that you understand the risks and know how much you can contribute without jeopardizing your retirement. These are usually utilized only by execs who have already maximized the tax-advantaged 401(k), FSA and HSA possibilities.

Equity Liquidity Events

When the company is merged, acquired, or sold, the senior executives often find themselves awash in liquidity. This is where a financial plan can be extremely important in order to avoid spending down the largesse, or even being taken advantage of by savvy salespeople.

Use a financial plan to manage or optimize a liquidity event.

A comprehensive financial plan is tailored to your specific financial goals. Managing a liquidity event properly can help you achieve those goals. It may even allow for new or bigger goals to be set, depending on the size of the event.

If you have kids to put through college, a liquidity event could be your answer. You might be able to prevent your children from taking on too much student debt. Most financial planning software systems contain recent data for costs for most colleges and universities in the US. There are tax-advantaged accounts that can be utilized as well (529 and 529ABLE accounts.)

Or you may be thinking about legacy planning, and a financial planner can help you do that in a tax-efficient way. There are a number of ways to set aside money for charitable purposes. Planning this in advance allows you to take advantage of the opportunities still left to investors in the tax code.

If you’ve identified a potential need for medical cost planning in the future, money from the event may be set aside in a specific vehicle for this purpose.

And so on; the money can protect against some “holes” identified in the household’s needs.

Your financial planner may also recommend the services of a trusted estate planning professional, who can set up the appropriate trusts and legal concerns. Especially in California, it’s important to keep as much out of a probate estate as possible.

Is equity compensation an important part of your financial life? Email us to discuss creating a financial plan today.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Let a financial planner show you the variables involved in selling your business.

For many business owners, selling their business is one of the biggest financial transactions they’ll ever deal with. It’s an important decision that has significant ramifications for retirement (and other) planning. Which means it’s important to develop a financial plan before the sale of the business.

Business sales: How much can you get for your business?

Business owners usually have a good grasp of their revenues and expenses year after year, by the time they get to the stage where they’re looking to sell the business. Most of them have already done some due diligence. They know what multiples businesses in their industry typically sell for, as well as the factors that influence this number.

Accounting businesses typically sell for about 1.2 times revenue, for example. Smaller, solo firms are easier to sell, especially when they’re up to date with the latest software. If you’re an estate planning attorney, you also need to have up-to-date software to make your practice look more attractive. They have similar revenue multiples.

Insurance agent? Normally your price is between 4.5 and 7.5 times earnings. Other businesses run on different multiples, but a competent business broker in your field (or a search through recent comps in your area) can give you a range to expect.

If you know approximately how much you can sell the business for, then why do you need a financial plan before the sale?

You might be thinking that it will be easier to just wait until you have the money in hand before you do the plan.

How a financial plan can help you sell your business. 

Once your experienced financial planner has set up your goals and examined your financial information, inputting the sale amount is a fairly negligible amount of work. In other words, there’s no difference in terms of you gathering information and your planner working through the inputs as to whether you do it before or after the sale.

However, some of the business information that goes into the financial plan is also what buyers of the business want to see anyway. If you put it together for the financial plan first, it’s ready to go when buyers ask. You may be able to shorten the time it takes to close the deal by doing the plan first.

The plan will also take taxes into consideration. If you sell your $1 million in revenue accounting firm for its expected 1.2 times, your bank account isn’t going to balloon by $1.2 million once you take taxes into account. You’ll end up with substantially less with a cash payment upfront.

3 key variables to plan for when selling your business.

One of the key variables, of course, is the sale price. If you have a business that Google decides to buy for 8 figures, whether the price is a little on the high end or a little on the low end probably doesn’t really matter.

But if you’re an insurance agent with $1 million in annual earnings, there’s a potential $3 million difference between 4.5x and 7.5x. Depending on your lifestyle and your goals after sale, that could have a big impact.

And let’s face it, many business owners tend to inflate the value of their business. It is, after all, the business they worked so hard to build for all these years. Of course they think the goodwill may be a little higher than it actually is, or the price should be at the high end of the multiple range.

The buyers, on the other hand, have no incentive to pay high. They need proof that the business is actually worth 7.5 times in order to pay that amount. It’s pretty common for mismatches like these.

Know the Different Business Sale Scenarios Available to You

When the business owner does a financial plan ahead of time, they can look at scenarios along the spectrum and see what the potential effects of a lower payout are. They might have a floor for the sale, under which they can’t achieve a good retirement or other financial planning goals they have. They might not be able to leave a legacy behind as they had planned. They’ll know ahead of time which buyers aren’t going to work for them.

Or they may realize that their financial goals (based on the gross number) are too lofty for what’s coming in after tax and need to adjust. Better to know this ahead of time!

The financial plan can also tell a business owner how long they can hold out for the higher end of the range. Do they need an infusion of cash within the next year, or will any time during the next five years do the trick? The business owner may be able to wait for that higher payout.

Many financial businesses, like accounting and financial advisory firms, don’t sell for all cash upfront. They’re paid a trail, or portion of the earnings (or revenue) from retained clients, until the balance is paid out.

No one wants to sell with a smaller amount upfront only to find out that it puts their retirement plan in peril.

Preparing the plan ahead of time also helps provide the owner with an exit strategy. Does s/he need to stay on and earn a salary for a few years while the new owner gets up to speed?

Some buyers may want the owner to hand over the keys when the deal is signed, never to return again. Others may prefer to keep the previous owner on to make a more gradual transition. Knowing whether you need to stay on or not can provide leverage for the deal in other ways.

Prepare Your Family for the Sale of Your Business

A key benefit, at least in terms of behavioral finance, is that by planning ahead of time and knowing where the money will go, there’s less chance to spend the money inappropriately. When a big payment comes from (seemingly) out of nowhere, unprepared family members may see it as a windfall, and not the result of a carefully thought-out plan.

Business owners themselves are usually pretty frugal with their money! But spouses or children may not be. It’s helpful for those who have spendy family members to bring them along to the financial planning meetings. (Spouses should always attend anyway, even if they don’t deal much with the investments.)

Knowing where the money is going when it reaches the family makes it seem like just part of the process when the money actually arrives, if everyone has been in on the plans. 

You might very well have decided to upgrade a family car or renovate the kitchen when you receive that first deposit, but you’ll have a budget for it.

The windfall doesn’t seem so sudden when it’s been planned for, discussed, and put on paper.

A financial plan helps you get the most from selling your business.

When you go to a financial planner who has the software but not the experience, you’re more likely to end up with a generic plan. Inputs go in the software, and outputs come out. Some of these software packages can generate hundreds of pages!

Some of the software packages have a blunt-force instrument that adjusts all the goals to bring the plan to survival. Your inexperienced planner can use this solve button.

But sometimes the results are ridiculous. Your budget might be cut in half to make everything work, which is usually not realistic at all. There may be some goals you need to give up on, or you may need to work longer than you originally desired. But both of these may be more palatable than halving your budget!

Experienced financial planners know that some issues and goals weigh more than others. If the plan doesn’t quite work, or the expected probability is too low, a CFP® professional who’s been in the trenches for a while has a good idea about what tweaks need to be made.

They can work with you to prioritize goals, so that you may give up on one or meaningfully reduce it in order to make the plan survive for your entire life.

A financial plan helps you get the most from selling your business.

In short, preparing the financial plan and discussing various scenarios and their expected effects prevents the business seller from unpleasant financial surprises after the deal is signed and closed. They’ll know which buyers they can rule out, if they have a minimum requirement for the sale price that allows them to achieve other financial goals.

If they’ve been thinking in terms of gross revenue, as many people tend to do, they’ll have the reality check of what the after-tax results will actually be. They’ll know if they need to structure the deal in a certain way to minimize taxes. Or if they can sell to someone who will need a longer period of time to pay off their commitment.

They’ll also be able to prepare their families ahead of time, which will help ward off any “windfall” spending. The plan will help reduce uncertainty for the spouse as well. Some spouses fear that the business owner is too optimistic, and having the financial plan at hand will help them realize that they will be all right, even in old age, as a result of the plan.

Are you thinking of selling your business? Email us to get started on your financial plan, so we can help you avoid those unpleasant surprises.

A financial plan from Platt Wealth Management

We are a fee-only firm that is a member of NAPFA (National Association of Personal Financial Advisors). We act as fiduciaries, putting your needs first. Both of our financial advisors are CFP® professionals, with years of experience in the field of personal finance.

We tailor our comprehensive plans to each client, ensuring that the plan is clear, well-organized and easy to follow. We continue to monitor the plans after they’re set up.

Email us to get started on your financial plan today!

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

A good financial plan is an important tool for a happy retirement.

As you (now) know, a comprehensive financial plan is an important tool for a happy retirement and the ability to achieve your financial goals. It’s your road map to financial success.

Most firms have flexible software packages that allow them to stress-test the plan under different financial scenarios. Any financial advisor now has the ability to develop a financial plan for you that includes an analysis such as a Monte Carlo simulation.

No, that doesn’t mean the advisor runs off to Monte Carlo and gambles with your money! This is a tool that generates random portfolio returns for the lifetime of the portfolio. The returns utilize the expected return of the portfolio, given its composition, and the standard deviation. Most Monte Carlo simulations include the “Great Recession” returns that the portfolio would have experienced at the time.

This analysis provides the probability that the portfolio will “survive” the random returns generated over its lifetime, given the portfolio’s composition, the investor’s financial goals and expected income and expenses over time. It’s a good indicator of the viability of the plan.

With today’s modern financial planning software, pretty much anyone can input the numbers and get a reasonable result out of the other end.

Should you let the software do all the work and not worry too much about who’s doing the plan?

No, because the software is just a tool.

You want the right person wielding that tool.

A financial plan from a credentialed financial advisor. 

It’s important that your financial planner hold a financial planning designation. The most well-known and accepted standard is from the CFP Board.

A CFP® professional has been through a learning course that typically takes 18-24 months to complete. Passed an exam, which may have taken one or two days, depending on when they obtained the certification. Plus, developed financial plans for clients for two or three years before being awarded the designation. Read how we exceed CFP® professional standards.

Thereafter, they are required to earn continuing education credits (including ethics) in order to maintain the designation. As you can see, it’s a pretty rigorous process, and the learning doesn’t stop after the designation is earned.

By contrast, a financial advisor without the designation may not have any continuing education requirements. They may have some licenses issued by FINRA, the Financial Industry Regulatory Authority. Depending on what they sell and how they sell it.

Security licenses may take a month of study (or less) to obtain. An advisor with no financial experience at all is able to hang out their shingle once they’ve passed the exam. There’s no requirement for the advisor to have any length of practice in the field.

The CFP® professional will work with you on a continuous six-step financial plan process.

1. Define the relationship between client and planner
2. Collect the data, set expectations and develop financial goals
3. Analyze and evaluate
4. Create recommendations
5. Implement the plan
6. Monitor progress

A good financial planner won’t hand you the book of paper that the financial software generates and allow you to let it sit on your bookshelf.

It’s also helpful to work with a fee-only financial planner. They don’t charge commissions, so they normally don’t work with products such as life insurance and annuities. All CFP® professionals learn about insurance and annuities as part of the course work. They can identify when and where these needs arise.

Not everyone needs them, even though many salespeople like to sell them. These types of products pay out hefty commissions. There might be a conflict of interest for a planner who also sells these products.

Most fee-only planners have a trusted professional they will send their clients to if such a need is discovered during the six-step financial planning process. By working fee-only, there is no incentive to find an insurance or annuity need.

Your fee-only planner is also likely a fiduciary. Put simply, this means that they put the clients first, ahead of their own interests. The standard for financial advisors is lower, where their recommendations only need to be suitable for the client.

A financial plan from an experienced financial planner.

If your planner is a CFP® professional, they have experience in the field of financial planning. Having years of experience means that they know what the common mistakes are, and they can give their clients a head’s-up if they seem to be entering this territory.

It’s also important to hire a planner that has worked with clients like you before. They know the common mistakes, but they’re also empathetic to the concerns you have.

In addition to a comfortable retirement, legacy or passing wealth down to the next generation might be a concern. Selling your business and managing the effects of that sale are big questions for clients who own their own firms.

Many women at this stage in their lives find themselves sandwiched. Caring for children, who may be at or near college-age, and all the associated financial and emotional baggage. Trying to fund their own retirement and protect themselves in old age. And simultaneously dealing with aging parents.

It’s a lot to take on! Having a financial planner who has worked with sandwiched women knows exactly what a huge issue this is.

Your financial plan, customized to your needs.

When you go to a financial planner who has the software but not the experience, you’re more likely to end up with a generic plan. Inputs go in the software, and outputs come out. Some of these software packages can generate hundreds of pages!

Some of the software packages have a blunt-force instrument that adjusts all the goals to bring the plan to survival. Your inexperienced planner can use this solve button.

But sometimes the results are ridiculous. Your budget might be cut in half to make everything work, which is usually not realistic at all. There may be some goals you need to give up on, or you may need to work longer than you originally desired. But both of these may be more palatable than halving your budget!

Experienced financial planners know that some issues and goals weigh more than others. If the plan doesn’t quite work, or the expected probability is too low, a CFP® professional who’s been in the trenches for a while has a good idea about what tweaks need to be made.

They can work with you to prioritize goals, so that you may give up on one or meaningfully reduce it in order to make the plan survive for your entire life.

A financial plan is a tool you can use.

A pretty document with charts and graphs that look very nice and is provided to you in a lovely binder is utterly worthless if it sits on your shelf. Remember, the plan is a road map! It’s a document that changes as your life changes. It requires updating and monitoring as time goes on.

Consider a road atlas (if you’re old enough to have used maps!) There were maps in it with lots of detail, down to the street name.

However, it probably didn’t have a lot of detail on how the street was named, who named it, who used to live on it. Or the history of the county in which the street was developed, with lovely color pictures of what the place used to look like. Or pictures of when the road was built, or the homes and business that line it now.

Similarly, you don’t need a lot of extraneous detail in your road map. You don’t need pages and pages of colorful charts and graphs in order to understand and implement the plan. Most financial software systems come loaded with all kinds of charts and graphs. You just want the ones that are relevant to you, with the detail that you need to carry it out.

Most of the systems also come with the statistics behind the charts and graphs. Some people need to see the statistics so they can understand where the numbers came from, and satisfy themselves that the plan results didn’t just come out of thin air.

Others just want the top level summaries and prefer to leave the details to their planners. Either way is fine, and an experienced planner will provide the customized detail that’s right for you.

A financial plan from Platt Wealth Management

We are a fee-only firm that is a member of NAPFA (National Association of Personal Financial Advisors). We act as fiduciaries, putting your needs first. Both of our financial advisors are CFP® professionals, with years of experience in the field of personal finance.

We tailor our comprehensive plans to each client, ensuring that the plan is clear, well-organized and easy to follow. We continue to monitor the plans after they’re set up.

Email us to get started on your financial plan today!

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Why is a comprehensive financial plan important?

For most Americans, a common financial goal is retirement. It requires saving and planning over time. It’s a journey, not unlike climbing a mountain such as Mt. Everest.

No one decides one day to climb the mountain and jets off immediately to blindly hike up the face. Climbers spend plenty of time in preparation, mapping out the routes, hiring a guide (Sherpa), collecting supplies, etc. Not spending enough time preparing could easily mean death.

Not preparing for retirement probably won’t lead to immediate death! But goals and bucket lists are more likely to be left unfulfilled.

Do you consider yourself reasonably successful in business, as many of our clients do? Well, did you achieve your success by throwing everything and anything at the wall to see what stuck? Did you start off doing whatever you felt like, without doing any research, guessing at what was going to happen? Randomly deciding one day what you were going to do, and then going out that very day and picking a task that seemed like a good one to start?

Of course not. You researched, you planned. You created Plan B in case Plan A didn’t go quite as … well … planned.

Probably you have a calendar or other type of organizer with your tasks created and deadlines set.

Same with your finances. Saving money, as most of you are already doing, is a great step. But it’s only a first step. In order to invest it properly, you need to know the timeline for when you’ll likely need the money. Retirement is a long-term goal. Even after you’ve retired, you might live a long time.

A financial plan considers your whole financial life. What are your other goals?

Will you be caring for a loved one: parent, child, spouse, in later life?

Are you thinking about how you’re going to pay for college for your kids?

What about travel?

Launching your own business, building a house by the lake?

Quitting your current job to spend more time with loved ones or on hobbies?

What will you do when sell your business?

Achieving goals isn’t just a matter of cost, or foregone income (depending on the goal.) It’s also about the timeframe available. Saving early and often provides a great deal of flexibility in later life, but the goals might still require some adjustments.

The comprehensive financial plan helps investors to prioritize their goals as well. Time on this planet and money available are both finite for most people. Tradeoffs are required. A good plan can show the costs of one choice over another. At the end, of course, it’s the investor’s decision as to what they prefer to focus on.

What is a comprehensive financial plan?

It’s a road map for the rest of your financial life, in which investments play an important, but not the only, part. A financial planner will help you identify and prioritize financial goals, and then help map out the steps to get to those goals. The plan will show whether the investor is on track to achieve their goals with current habits. It’ll help the advisor spot issues that need to be addressed.

But even an all-stock portfolio doesn’t perform steadily. Some years the return is higher, potentially much higher. In 2013 large company stocks grew 32% and smaller companies reached even higher than that. Obviously the converse is also true. Some years will be lower – significantly lower, even negative, as shown during the Great Recession.

Similarly, the financial plan will not exactly fit to what happens in life. Which tends to throw in detours along the way! When big detours happen, the plan should be reviewed to see if there are any changes that should be made.

Benefits of a financial plan.

During the process of developing the plan for a client, planners often come across needs that wouldn’t be found any other way. There are a number of different issues that can eat away at wealth, before the investor even has a chance to use or enjoy it.

Your Financial Plan Will Show How to Protect Your Assets

Sometimes there’s a need, even if temporary, for life insurance, for example. This is common among two-income families with young children. Should one parent experience an untimely death, the other will still be able to pay the mortgage and other expenses from the policy proceeds.

An umbrella property and casualty policy safeguards an investor’s assets in the event someone is injured on their property and sues. It could be a repair person who falls on the concrete walk, or someone who trips and falls at a party. The costs of an umbrella policy are relatively low compared to potential loss from a lawsuit.

Your Financial Plan Will Include Possible Medical Costs

Long-term care is an issue for many elderly Americans. Slightly over half the 65+ population will need it at some time during later life. This type of care is triggered when, even if just for a short period of time, the senior is unable to perform some of the Activities of Daily Living (ADLs).

These include dressing and feeding oneself, going to the bathroom, transferring (between seated to standing, for example), etc. The cost of hiring someone to perform this care isn’t covered by Medicare. In 2015 Americans spent $225 billion on long-term care. Fortunately, in addition to self-insuring, there are some ways to provide for it.

The number one concern for retirement planning is the cost of health care and unexpected medical expenses.

Your Financial Plan Will Show How Much You Need for Retirement

Understanding your full picture: goals, values, personal dreams, and ambitions all fit into your financial plan and can help us give you advice to best suit the life you want to live.

We want to empower you to make the best financial decisions. Knowing that your advice is coming from a financial advisor who has your back and is looking out for you will help you be more confident.

How Platt Wealth Management prepares your financial plan.

Our CFP® professionals will need you to do some homework first! We need the household’s Social Security information, tax returns, spending and income information, along with some other info depending on your situation.

Because every client’s situation is different, our plans are customized for each household.

We’ll ask about your goals and dreams so the plan accounts for them. We consider the timeframes around these goals, as well as the costs. Our financial planner projects probabilities as to whether you’ll be able to attain these goals on your current trajectory.

It may be the case that not all your goals are achievable, at least with your current plan of saving and investing. We’ll show you what you would need to do to achieve the goals, and help you prioritize them where necessary.

Your financial plan action items for the new year.

Once we’ve run the initial plan, we’ll schedule a meeting go over it with you. And your spouse (if applicable), even if they don’t normally participate in the investment activities.

We provide a way to think through any issues that may have been spotted during the process.

At Platt Wealth Management we don’t sell any commissionable products such as life or long-term care insurance or annuities. We are a fee-only fiduciary. However, we team with other trusted professionals who can provide them to you if we uncover a need. We don’t recommend anyone who doesn’t put our clients first!

Once the financial plan is complete, we want to review every few years to make sure we’re still on track. If anything significant changes, we need to rerun the plan. Job loss, divorce, inheritance from a parent – all of these are important changes that may mean a change in plan.

A financial plan is an extremely valuable tool for you, and we want to make sure that you have one. Send us an email or call us at 619.255.9554 to get started on your financial plan today.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.