Financial Planning: A Process not a Destination


I had the pleasure and eye opening experience of speaking to a few folks about financial planning these past few weeks. The few people I spoke to had similar responses when we engaged into conversations about retirement planning. The general message was, "We've saved diligently and should be fine for retirement."; these were professionals in their mid-50’s and of course are near retirement.

Out of my own curiosity, I decided to dig a little deeper and ask them how they knew they would be fine and surprisingly got another similar response. "My adviser says if I keep on saving I'll have "X" amount of dollars and that should be enough, right?" I replied, "Is it enough? Is it too much? Is it too little?" At first, I got a couple of confused looks, so I continued by asking, “Has your adviser tested these values against your goals and personal expenses? And if he or she has, what is the probability you make it through retirement without running out of money?"

I went on to explain how financial planning is a process and not a destination. The goal isn’t to reach a certain value in your investment accounts but to maximize your life with whatever means you have. Some people may be lucky enough to accrue one million dollars or more by the time they retire but the real question is, have they tested it against the lifestyle they’ve imagined for themselves? Others may be unfortunate and become disabled before retirement so they can’t save as much but the question is, have you or your adviser accounted for life's twist and turns?

I started to think about the "Before I die" wall that my wife and I stumbled upon in downtown San Antonio and thought to myself, "Why would anyone settle for a value as their financial plan?" Very few people would write on that wall, "Before I die, I want to accumulate "X" amount of dollars." The Why in financial planning is just as important if not more important than the How. It's the Why that drives a plan because it can change.

You see, life changes for everyone unexpectedly. You may one day have children, retire, divorce, or even become a grandparent. Where you are in life, how you think, and what you value now will not be the same 5 to 10 years from now much less 30 years from now, just look back at where you were 5 to 10 years ago as an example. This is why your financial plan should not solely revolve around some number, or some investment, or a single product. Your financial plan should change with you as much as you evolve as a person and professional.

My tip: Find yourself an advisor to work with that actually advises. Someone who is genuinely interested in your personal and professional life. Don’t settle for the so-called financial advisor that contacts you every year to get more of your money into an investment account and doesn’t even take the time to get to know you. You can find some of these advisors in the XY Planning Network, The Garrett Planning Network, The Financial Planning Association and NAPFA. If you’re a do-it-yourselfer like I am, start off where I did. Read The One-Page Financial Plan by Carl Richards. I promise it’s a great starting point for anyone that just needs some guidance.

Make a plan, let it change, and adjust.


MyLife Financial is a fee-only financial advisory firm providing objective and independent advice virtually. Our clients are busy professionals that face daunting questions of how today's financial decisions will affect their long-term financial success. Everything written is strictly for informational use only. Please seek the advice of your CPA, Attorney, or financial professional before implementing any strategies.

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