Asset ProtectionEstateInvestmentRetirementSavings

Creating a Financial Plan : The Process

By September 23, 2020 No Comments

If this year has taught us anything, it’s that anything CAN happen. Planning for emergencies is not only smart, it’s highly responsible — especially if others are depending on you. Many young people are making a great income, but are still living paycheck to paycheck. This philosophy of enjoying your youth, not worrying about the future yet is completely understandable. Being a young man myself, I understand. However, in the case that you should lose your job, do you have a game plan? How many months of rent do you have saved? It’s not just young people. Did you know that — according to Forbes in 2019 — 78% of Americans were living paycheck to paycheck.

Creating a solid financial plan is about balance. Yes, you should enjoy the income you earn, but you should also be managing your money responsibly. Not to mention, having some savings will help you enjoy your life even more. How much anxiety does it cause you to open your banking app and check your balance? You can and should develop a solid strategy so that you can begin to not just live your live now, but build an even better one in the future.

The role of a financial advisor is to lessen the burden of maintaining your finances on you. In my opinion, this includes providing a clear, comprehensive financial plan in addition to guiding you with your investments. In this article, I will walk you through the basics of creating a financial plan.

A word of caution, no matter how much time you are able to pour into creating your financial plan — unless you yourself are a licensed financial advisor — you will not have the foundational education nor the resources that a licensed financial advisor does. Should you want further assistance, beyond what this article can provide, please email me at to set up a meeting.

Retirement Planning

For the sake of our own mental health, many of us like to live in the present. We have enough going on today to stress about tomorrow. This is completely understandable, and I’d even argue, healthy. However, there are some actions you can take today that will make tomorrow easier. If you can save even $50/month, you will be making a significant difference in your future over time.

It’s sometimes even better to invest via tax-advantaged accounts like
– 401(k)
– 403(b)
– Traditional IRA
– Roth IRA
(and very rarely) Annuities and related products.

The majority of Americans in their sixties have less than $200,000 saved for retirement. In retirement, many people’s budget turn completely upside down. For example the mortgage may be paid off, however, overall and daily expenses increase.

As a young(er) person, you have the ability to save right now so that you and your partner will be able to retire at a reasonable age AND enjoy that retirement. If you are approaching retirement, increase savings as much as possible, invest according to your situation, and start planning for your necessary expenses.

Investing, especially near to retirement MUST be done intelligently. There is zero reason to gamble your lifesavings when you need it most.

Investment Planning

Before creating an investment plan, an advisor will work with the client to assess their situation, goals, and philosophy to determine a strategy that will work for them.

The first task is to determine a risk tolerance (also referred to as a risk score). The risk tolerance is determined by three key traits of the investor.

The first is their philosophy — meaning, their approach to investing. An investor can have an aggressive, moderate, or conservative approach to their investment strategy. I often show my clients with an aggressive investment philosophy a case scenario depicting what would happen to their investments during a recession. Once they see their accounts slashed in half, they typically reconsider.

The second is age/time horizon. If you’re a young(er) person, an aggressive strategy may be suitable for you, due to the fact that you have enough time to recover any significant losses prior to retirement. I use age as a reference point for allocating bonds versus stocks. Your age should typically be the percentage of your bond allocation within your portfolio. If you are 30, as a general rule, you should own approximately 30% bonds and 70% stocks. The sooner you will need that money, the more conservatively you should be invested.

The third is goals. What are you hoping to achieve through investments? It could be diversification, income generation, it could even be for “fun” (do not gamble with more than 5% of your investable assets).

Don’t overthink it and stay simple. Invest for the long term, and don’t let short term fluctuations impact your investment decisions. Focus on high quality taxable and non taxable investments.

If you have a larger amount of investable assets, looking at SMAs (separately managed accounts) may be a good idea. I have a video on this topic that explains why, concisely. You can also contact me to learn more about this.

Estate Planning

Estate planning broadly refers to the protection and distribution of your assets upon your death. Through estate planning you can prepare to continue providing for your loved ones after you pass, as well as ensure your assets are correctly distributed to the determined parties.

If you have a relatively simple situation (starting in life…), you may not need to worry about it yet. Once you start your family and/or begin to accumulate wealth, it’s time to create a will, general power of attorney, medical power of attorney, etc. Make sure to consult your attorney for this. If you’re looking for an attorney, I can refer you to trusted professionals within your network.

If you have accumulated lots of assets and have a complex situation, you may need an irrevocable or revocable trust (based on your needs) and power of attorney.

You should also consider insurance, including life, disability, and umbrella policies. For more information on this, please read my article on different types of insurance.

To sum up

These are just the basics of what a financial planner goes through when developing a financial plan. It’s highly important for you to manage and protect the wealth you’ve worked so hard to build. My goal is to offer whatever knowledge I have in order to help you do just that. Please feel free to contact me with any questions at You can also find more resources here:

You can find my recent videos both on my website and my youtube channel here:

Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Asset allocation and diversification do not ensure a profit or protect against a loss.