Start with the End in Mind Planning
Why Do We Start with the End in Mind?
Simply put, if you don’t know where you want to be in life in 5 years, 10 years, 50 years, how can you plan to get there? In our experience, once a person sits down and puts attention into where they want to be at different points in life it becomes very clear whether or not the past and present actions taken support moving in that direction. We also find that this becomes a fun process for the client with benefits that extend far beyond financial matters.
Before we start planning we want to know where we’re headed, and then we work backwards from there in building your plan.
What Are Some Things to Consider?
This will depend on the individual. Most of us share the same events in life and so we like to touch on each of them. Where do you see yourself professionally in several years? When would you like to retire? Where do you want to live and in what type of home? Do you have children and, if so, what do you envision for their educational needs? Do you want to travel? Do you have any hobbies or activities that require some cash to make possible in your life? Do you have wealth that you’d like to pass on to others upon death— family, close friends, important charities? Do you have trouble saving money? Would you like to take a break from work for a stretch? Do you or someone in your family have special health needs?
What Are the Consequences of Not Having the End in Mind?
As an example, someone might put their money into an investment that requires the money stay in that investment for a long time, such as seven years. What if an important financial need came up during that period, such as finally finding the family “dream home”? Having not planned to have proper liquidity for such an event would cause that person to lose an important opportunity in life.
As another example, a person with a large estate who wants to pass as much wealth as possible to their children might not do the proper estate planning such that, upen death pays more taxes for having not planned properly, and thus passes on less money that he or she could have.
In Closing
Taking the time to plan for one’s life is fun and of great benefit. Failing to do this can sometimes lead to undesirable and avoidable consequences. One of the many benefits of working with an experienced financial advisor is that you are forced to plan for important and desirable events that you want in your life. For us, this doesn’t just happen at the start of our relationship, but is an on-going process with all of our clients.
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Todd E. Frank, CPA/PFS, MBA is the President and CEO of Frank Financial Advisors, a Registered Investment Advisory Firm (RIA) serving clients nationwide from our headquarters in Carlsbad, San Diego, California. As an RIA, Frank Financial Advisors is able to offer truly independent, fee-only financial advisory services.
