Build your financial planning strategy by knowing your situation

Do you know what your assets are?

Some people like managing their own portfolio, while others don’t. However, even if you fall into the latter category and prefer to pass the reins to a money manager, there are still a few critical points that you need to know.  Conveniently, you don’t need to understand the financial figures as much as you need to understand yourself.

Think about what your goals are and how much risk you can tolerate. By sharing that information with your adviser, you are giving him the facts that he needs to help you choose the investments that can help you achieve your goals within your risk-comfort zone. He can also tell you if your goals are unrealistic. This can go two ways: some people want to spend much more than they can afford (like the lady I met who said that from her $400,000 inheritance, she wants to give each of her four children $100K to buy a house, and then she wants to use the rest to fund her retirement), while others don’t realize what they really can do (like the couple I spoke to who didn’t go on vacation because they thought they couldn’t afford it, even though they had over $1 million in the bank).

Think about what you need for yourself and for your family.Talk to your spouse and your kids. Write down your basic budget, and then think about the costs of your dreams. Bring that information to your financial planner to use as the starting point for your plan. As you delve into your own goals and financial situation, he should be able to recommend the investments that are appropriate, and 

take the time to explain them so that you can make a decision about whether to go ahead and invest in them. No one expects you to become a master investor, but you should interact with your professional adviser enough, and then you’ll find that making choices isn’t so intimidating.Men and women at workCredit: Image: photostock /

For more about why you need a financial adviser, read Three Reasons to Choose a CFP® to Guide You Through the Financial Planning Process.


Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.