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Financial Tips & Insights

Getting Your Financial House in Order


While investing is the focal point to achieving and maintaining long term financial security, investing should not be viewed in isolation of other important financial matters.

For many individuals and families, financial planning can be daunting because it is complex and requires dealing with multiple issues related to lifestyle, family obligations, and legacy. Planning ahead can provide a simple blueprint with key steps to the next stage of your life.

Whether you do-it-yourself or work with an experienced financial advisor, with careful planning, you can move steadily closer to attaining your financial goals.

Getting Your Financial House in Order

1. Establishing and defining the client-planner relationship - The financial advisor explains or documents the services to be provided and defines his or her responsibilities along with the responsibilities of the client. The advisor explains how he or she will be paid and by whom. The adviser and client should agree on how long the relationship will last and on how decisions will be made.

2. Gathering client data and determining goals and expectations - The financial advisor asks about the client's financial situation, personal and financial goals and attitude about risk. The advisor gathers all necessary documents at this stage before giving advice.

3. Analyzing and evaluating the client's financial status - The financial advisor analyzes client information to assess his or her current situation and determine what must be done to achieve the client's goals. Depending on the services requested, this assessment could include analyzing the client's assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4. Developing and presenting the financial planning recommendations and/or alternatives - The financial adviser offers financial planning recommendations that address the client's goals, based on the information the client provided. The adviser reviews the recommendations with the client to allow the client to make informed decisions. The adviser listens to client concerns and revises recommendations as appropriate.

5. Implementing the financial planning recommendations - The adviser and client agree on how recommendations will be carried out. The adviser may carry out the recommendations for the client or serve as a "coach,” coordinating the process with the client and other professionals such as attorneys or stockbrokers.

6. Monitoring the financial planning recommendations - The client and financial adviser agree upon who will monitor the client's progress toward goals. If the adviser is involved, he or she should report to the client periodically to review the situation and adjust recommendations as needed.

Finding a Competent Financial Advisor

What constitutes the right of kind of advisor for you depends on your needs. If you want to be assured of getting objective advice, use a fee only adviser -- but be prepared to pay for the service. A fee only advisor usually, but not always, is in the business solely to provide you with independent advice. That's often what you need, particularly if you use a financial adviser infrequently. That doesn't mean a planner who earns commissions should be avoided, so long as you understand that there may be a conflict of interest. Look around; there are many excellent financial advisors – both fee-based and commission – in your community.

If the relationship is not working out. It is amazing how many people dislike or distrust their advisers, particularly their investment advisors, yet continue to do business with them. If you are not satisfied with one of your advisers, it may be because you have not taken an active role in the relationship. First, try to resolve the problem, but if it persists, do not hesitate to make a change.

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