• Jeff Sproul

The Importance of a Financial Plan

Updated: Jun 6, 2020

Over our lifetime we spend a lot of our time planning a variety of events and/or activities. It is not uncommon to spend a year or two planning a wedding. During that period we also leverage the knowledge of a variety of experts either directly or indirectly to ensure that the bride's special day goes smoothly. Similarly we take the same care when planning a vacation or building a house in order to not only satisfy our needs, but also fulfill many of our dreams and desires.

However, High Net Worth individuals have a tendency to neglect/avoid allocating a proportionate amount of resources when it comes to planning their financial well-being and/or the transition of their wealth to future generations. It is not very often that a financial plan does not uncover areas for improvement and more often than not, there are findings of significant proportion.

The topic of Financial Planning is often talked about but not exercised. This may be a result of the misrepresentation of “Financial Advisors” using the title of Financial Planner as a smoke screen for a mutual fund sales person. However, in the true context of the designation, there is unlimited value for anyone who not only embraces the ideology of financial planning but also puts into practice the findings of the plan.

Many people make financial decisions with good intentions, but do not have the expertise, nor have they engaged a professional who does to assist them in making decisions. A perfect example is the concept of joint ownership which has the potential to cause significantly more issues than protecting against them. For that reason, a true Financial Planning process, takes a complete picture of your family's financial situation. This would include a detailed understanding of all assets and liabilities, tax implications, estate documentation, cash-flow analysis and the inter-relationship between them all. Furthermore, there needs to be an understanding of your goals, needs, dreams and aspirations. What matters most to you; health, family, charity, etc…? The process will uncover existing issues as well as allow for changes to avoid potential issues in the future, looking at what-if scenarios and ensure you are protected in any circumstance. All of this is done through the collecting of information, but more importantly through in-depth conversations with all parties involved. A full and complete understanding is the foundation for any financial plan.

Topics that are generally covered in a Financial Plan include the following:

  • Retirement Planning

  • Major Purchase Goals

  • Philanthropy – Planned Giving

  • Tax Planning – Structuring, Minimization, Deferral

  • Estate Planning – Wills, Power of Attorney, Trusts, Legacies, Pre-Paid Funerals

  • Insurance Analysis

  • Business Succession Planning

In all, a Financial Plan will provide you with much more than direction on your finances. It will provide you with insight into your overall picture, uncover issues and provide solutions, extend to lifestyle planning and most importantly provide you with peace of mind. A financial plan is an integrated component of the Northland Wealth Management Process. Ask yourself, is your plan complete?

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