Ever try to talk to an advisor and the first thing they want to do is a “comprehensive” written financial plan? The pitch sounds good, and it’s almost always the same.
You need a “road map” to know where you’re going, you need to “set goals”, you need to pay a fee to get an “objective” plan without a sales pitch. We might all need to do some financial planning, but do you need a written financial plan?
A typical request comes from a person in their 50s or 60s who comes to see me with a well-written trust and updated estate plan with a good attorney, and financial affairs in order with a CPA.
They’ve been told by other financial planners that they need a written financial plan which costs a few thousand dollars.
They probably don’t need one!
Because in my experience many planners start with the generic “everyone needs a comprehensive written financial plan” story as part of their process to sell more stuff.
These planners use written plans to uncover as many purported weaknesses in your plan. And this goes for both fee based and commission planners.
Many such plans result in a huge binder with 500 pages of boilerplate computer program material to justify a high fee that ends up sitting on a shelf somewhere.
And the plan might reveal you need more life insurance, more disability insurance or more “guaranteed products” depending on what the planner wants to sell you.
Keep in mind that not all planners do this, and there are legitimate reasons for some people to have a written plan
So who most benefits from a written plan?
Young people getting started and who are inexperienced can benefit from a comprehensive plan that may cover issues like retirement, estate planning, college funding and home ownership.
People with very complex financial situations with various businesses can also benefit from a comprehensive plan to help keep them organized and on track.
The rest of us are often suited doing some modular calculations to help us calculate our retirement and estate planning needs.
And most importantly, start with a personal balance sheet or net worth statement which can be drawn up in an excel spreadsheet, or even on a sheet of paper.
Otherwise, the expensive binder will sit on the shelf, never to be opened again.
Securities and advisory services offered through Sagepoint, Member FINRA/SIPC, a Registered Investment Adviser.
The opinions voiced in this article are for general information purposes only. They are not intended to provide specific advice or recommendations for any individual, and do not constitute an endorsement by Sagepoint. Please remember that investment decisions should be based on an individual’s goals, time horizon and tolerance for risk.[/fusion_text][/one_full]