Before your next yearly physical, your primary care doctor will send you to the lab for a blood draw. The blood will be used for tests in a number of important areas. The readings from the lab work, combined with a thorough examination, and your medical history, will give your doctor a good idea of your overall health, and indicate any potential problems. He or she will then counsel you on lifestyle changes that will benefit you, and possibly refer you to a specialist for further exploration. If you were looking for one word to describe what you just went through, you might land on comprehensive. It was indeed a comprehensive medical exam. Any financial plan an advisor presents to you ought to be as comprehensive as this medical exam. The financial plan should be all encompassing and cover every facet of your financial life.
To begin with, the advisor needs to know you, not a pigeon-holed category that resembles some aspects of your life, but you, an authentic individual. This begins with a multitude of questions. What are your values, your goals, your dreams? What resources do you have, or will have? Who or what is important to you? What is your time horizon for your goals? Your advisor should ask questions about your work. Do you like what you do? Can you see a change in your future work? Will you stay with your company or start your own? There should be questions about retirement. Is this something you are contemplating, eagerly anticipating, or dreading? Do you work because you have to, or want to?
Your advisor will build a balance sheet to see, on one page, all your financial assets and liabilities. More questions will follow about your investment history, your risk tolerance, and your risk capacity. A review of recent tax returns will open up other avenues to explore. There may be a need to send you to a specialist, an attorney to review or update your estate documents, and insurance agent to fill gaps in coverage, a CPA to get your company bookkeeping and taxes in order.
After the questions and a thorough review of your entire financial situation, it’s time to put together a plan to begin to achieve your goals and dreams. But the plan is not set in stone, it is a living document, because your life is constantly evolving. Your life situation changes, sometimes in expected and planned for ways, but often in unexpected life curve balls. A good advisor is nimble enough to tweak the plan to accommodate the changes.
So, what does your financial plan look like? Is it a document prepared 10-15 years ago that sits on a shelf gathering dust, a plan that reflects who you were, but not who you’ve become? Or, perhaps you have no plan at all. Maybe it’s time to sit down with a financial planner and chart a comprehensive course for your future.