Change is Inevitable. Growth is Optional. – John C. Maxwell
A one-time financial plan, no matter how well thought out, meticulous or clever, can become obsolete in short order. Why? Things change. Life happens. Marriage, divorce, health, jobs, family size, goals,
passing of loved ones, even our priorities – they all can and will either happen or change. There are also many facts of life beyond our control: changes to tax laws, interest rates, stock market fluctuations, and economic recessions which will all inevitably happen. Change is the only certainty in life, but having an adaptable, on-going financial plan is one way to create some stability.
One-Time vs. Ongoing Financial Planning
You might be wondering what the difference is between a one-time financial planning engagement versus an ongoing financial planning arrangement. First, let’s start with the 7-step financial planning process as outlined by the Certified Financial Planner Board of Standards, Inc.:
Understand the client’s personal and financial circumstances.
Identify and select goals.
Analyze the client’s current course of action and potential alternative course(s) of action.
Develop the financial planning recommendations.
Present the financial planning recommendations.
Implement the financial planning recommendations.
Monitor progress and update.
At a high level, a one-time plan typically covers Steps 1-5 and could be the right approach for you, depending on your age, stage in life, and/or the personal or financial complexities of your life.
For example, a newly minted college grad on their first W-2 job, with no college debt and a modest net worth is probably someone who could benefit from education on good personal finance hygiene, the wisdom of a diversified investment portfolio, the exponential power of compound investment returns, and cautions against trying to time the market.
Ongoing financial planning, as you may have guessed, includes Steps 6-7, with Steps 1-5 on repeat as often as needed (at least every few years).
Implementing Your Financial Plan is the Hardest Part
Many of us struggle with consistently doing what we know we should do and need to do. This is why personal trainers exist. Step 6 is all about implementing the financial planning recommendations and is probably the hardest part of the financial planning process because it requires the discipline to follow through on what you now know you need to do.
Working with a financial planner to help implement your financial plan provides much needed accountability, especially when it’s something mundane like making sure all your financial accounts are properly titled and beneficiaries are correct.
But their assistance is even more important when the plan identifies something confusing or complex like executing Roth conversions over a multi-year period or purchasing the right long-term care policy. A good financial planner can add a lot of value in this stage by helping you navigate and execute the implementation of the plan and being there every step of the way.
Monitoring and Adjusting Your Financial Plan Along the Way
Another benefit of an ongoing financial planning arrangement is having someone on your side that is consistently looking out for you by monitoring progress and helping you adjust your plan over time. This is Step 7, and it is where ongoing financial planning can really shine.
In an ongoing financial planning arrangement, the plan is often prioritized and implemented over a twelve-month period. This is because trying to implement everything immediately after the plan is presented can be overwhelming. Some financial planners may utilize a service calendar approach where the client and the planner meet periodically for discussion. Each meeting might have a different focus and call to action such as reviewing property and casualty insurance, estate plan review, employee benefits, budgeting, or end-of-year tax planning.
Behind the scenes, the planner can address important tasks that facilitate the client’s goals. For example, between quarterly meetings with a client, the planner might project taxes and withholdings and/or estimated tax payments, rebalance 401(k) and investment accounts, schedule the client’s CPA appointment, assist in gathering tax documents, or flesh-out action items for client career development and salary benchmarks.
As the relationship continues, your CFP® professional will continue to work on your behalf to optimize your plan to achieve your goals. This can include tax loss harvesting, Roth conversion scenarios, charitable giving strategies, tax planning in high- and low-income years, rebalancing portfolios, etc., while also being available to answer any one-off questions like ‘Can I afford this… lake house, private school, etc.?’
Ongoing Comprehensive Financial Planning Can Work for You
“Doing well with money has little to do with how smart you are and a lot to do with how you behave” – Morgan Housel
One of the best benefits of ongoing financial planning is uninterrupted access to someone that you’ve built a trusting relationship with that understands you and your values. Someone who not only can update your plan and goals as they change over time, or hold you accountable for implementation over the long-term, but also someone who can support you in the realm of money.
Overall, working with a financial planner in an ongoing manner can help you successfully implement your financial plan, remove the worry of monitoring for changes, provide proactive structure to your financial life while being opportunistic, and offer behavioral
coaching and support along the way. To learn more about how WHWM can help you design and build a plan, or help you adjust to life’s twists and turns in order to achieve your best personal financial life, schedule your complimentary, no-obligation 30-minute consultation with WHWM today.
Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and subject to change.
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