Financial Planning
For most of our clients the main concern is to not outlive their assets, and in the event of death, the surviving spouse has adequate resources to live a comfortable life. In order to define success, and its probability, we have developed the Financial Picture. The Financial Picture is the core tool that we use to evaluate a new client’s current status and assists us in monitoring the changing variables annually.
Goals and Information
A main component of the Financial Picture is the goals and information page. The scorecard on this page catalogs the status of issues such as; investment strategy, emergency fund, and estate planning. Each topic is evaluated, recorded, and monitored until it is complete.
In this page we also record your estate planning attorney, accountant, trustees, executors, and emergency contacts. It is very important that all aspects of your financial and legacy planning are coordinated and complimentary.
Balance Sheet
The balance sheet will incorporate all assets and liabilities; including financial assets, real estate, use assets, business interests, mortgages, consumer debt, and life insurance. Other information included is the asset’s form of ownership, designated beneficiaries, future inheritance, or outside financial obligations. Two important numbers from this work will be investable assets and survivorship assets. These two sums play a key role in determining odds of goal attainment. We also use this format to verify that all assets are titled correctly and beneficiaries are current.
Income Statement
The income statement is first used to calculate the various forms of income; including earned income, social security, pension, rental, and others. Secondly, the income is netted against expenses, indicating the annual spending surplus or shortfall. Combining the shortfall with information from the balance sheet, we arrive at the withdrawal rate and then the target return. This is a starting point for determining the probability of your retirement success and guides in portfolio construction.
We believe that Financial Planning is a process, not a product. This process is ongoing, and demands we work closely with our clients to properly implement. It is driven by a relational organization of financial and personal variables, that we use our Financial Picture to capture, organize, and demonstrate. The variables and formulas that underly the Financial Picture must be periodically considered and updated for the financial planning efforts to be successful.