Financial planning describes the task of determining the probability that you’ll be able to afford your financial goals and lifestyle. A financial plan embraces the performance of your investments and other assets, takes into account inflation, accounts for your income and expenses, and projects these out over your estimated life expectancy.
P&A believes a financial plan is an important piece to your future. You do not need to be an investment management client of Pittenger & Anderson to hire us to do a financial plan. We charge a flat fee of $1500 for a financial plan for those who are not investment management clients of P&A. This also entitles you to a complimentary update of your plan on the one year anniversary of the original plan being presented to you. Half of the fee is due at the beginning of the process, with the other half due when the plan is presented. If after we do a financial plan, you decide to have us manage your investments, we will credit what you have paid us to future management fees. We currently do not charge our investment management clients to do a financial plan.
What are the typical steps involved in developing a financial plan?
• Client completes our Financial Planning Fact Finder, which provides a good base of information to formulate a plan. Additional information such as investment account statements and tax returns are very helpful to us.
• P&A inputs the data from the Fact Finder into our planning software, which typically results in some follow-up questions.
• Once the questions are satisfied, we will produce a first draft of the financial plan, or a base plan. Depending on the results of the base plan, we may choose to stress the plan further by varying growth assumptions, increasing expenses, reducing incomes, etc.
• At this point, we will present the plan(s) to the client, preferably face-to-face. Alternatively, we can email or mail the plan and go over the results with you via a phone call. We will provide you with specific recommendations during this process.
• After the plan is presented, we suggest a periodic review (every couple of years). Updating the plan when major changes occur or simply after the passage of time is also recommended.
What does a financial plan look like? What do I get out of it?
We can provide a sample financial plan as well as a sample summary sheet for those who want to see what the output of this process looks like. Keep in mind this won’t be representative of all plans, but it will give you an idea of what to expect. You’ll notice tables and graphs for each section of the plan. Incomes and expenses are projected out over the life of the plan, investments are grown at a reasonable rate, and inflation is factored in. We include cash flow reports, a statement of net worth, and Monte Carlo simulations which show various return scenarios for the investment portion of your assets.
The goal of a financial plan is for you to learn more about your financial picture and to see if you’re on the right track. If you’re on the right track, a plan will provide the motivation to continue diligently down that path. A plan will also reveal if something needs tweaking, whether it be expenses, asset allocation, or the sale of a non-liquid asset. In our view, the financial plan is more than a report. It’s the first step in developing a collaborative partnership with P&A.
Click here to download our Financial Planning Fact Finder and Contract. If you are interested in having us do a financial plan or have any questions about the process, please contact us.