-By Scott Blakemore–
What comes to mind when you think of “Financial Planning”?
When asked what I do for a living, my response, “I’m a financial planner” is usually met with blank stares and the sound of crickets. Now and then I get a response, “Oh, I’ve done that”, “I have an annuity,” or “I have an IRA”. If only that was all it takes.
In the next few paragraphs, we’ll address three common perspectives regarding “Financial Planning” that many people share and how it affects their planning decisions.
I don’t understand enough to know where to begin. We hear this one often (both from clients and potential clients). They apologize for not knowing enough about their investments, pension plans, social security, health or insurance benefits.
Here is the good news: planners realize you have likely never been taught, nor do you probably want to learn about all the components of your financial situation. I don’t want to be a nurse or doctor, and when I go to the doctor, I don’t apologize for not knowing how to take my blood pressure. I am not trained in this, and they don’t expect me to know. I just want to know if my blood pressure is good or bad, and what to do to correct the problem. The same is true for a financial planner – you don’t have to know it all, but you do need to know who can help.
Financial planning is inflexible and limiting. Rarely does someone verbalize this concern, but when asked if they perceive this to be true, their eyes get wide and they nod their head in agreement.
How many Fortune 500 companies have business or marketing plans, sales forecasts, or budgets? Probably all of them. How many change their plans the following year? Probably all of them. Maybe they aren’t big wholesale changes, but as information comes in and circumstances change, they change. The same is true for your financial plan – a good plan is flexible and changes over time as you do.
I have a 401k, IRA or Roth IRA. I own an annuity, stock or bond. I’m all set. While various products and retirement plans are definitely components to be used appropriately when constructing a plan, they are not a financial plan in and of themselves. Does owning a bat make you a baseball player or owning golf clubs make you a golfer? Having the right equipment is important, but if you want to be successful, you need a coach – someone to teach you and help develop your skills. The same is true for a financial planner, we will help you learn the game, coach you and use the appropriate tools.
At its root, financial planning is mostly about trust in the person helping you. Remember, you aren’t required to understand everything, your plan can flex with you, and there’s much more to a financial plan than the components you use. Find someone who will listen to you and help you ask the right questions … that is the best, first step toward a more solid financial future.