A financial advisor can help your current financial situation while simultaneously helping you plan for the future. While some financial advisors focus solely on investments, Bogart Wealth’s Advisors offer holistic advice, meaning we take a big picture approach and create a broad financial plan designed to help you understand your finances and achieve your goals.
What Goes into a Financial Plan?
Because financial advice isn’t one size fits all, the exact definition of a financial plan, and what’s included in a financial plan, may vary depending on your advisor. At Bogart Wealth, a financial plan is a long-term financial strategy that:
Provides answers
Most people want to know what they are doing well and what improvements can be made. A financial advisor can answer those questions in the present and build a plan aimed at keeping you on track in the future.
Looks at the big picture
A financial plan only works if you follow it. It may not be realistic for you to max out your 401(k) every year (although you should always contribute enough to take advantage of any company matching funds if available). A good financial plan looks at your income, expenses, and goals, so you can balance them in a way that’s achievable.
A good financial plan can also help you avoid the type of risk that might knock your finances off track. For instance, an advisor might incorporate tax strategy into your financial plan so an unexpected tax bill doesn’t cause you to dip into your child’s college fund.
Helps you understand your goals
Many of us have headline goals that excite and motivate us…but might not be as great in real life.
For instance, retiring at 50 may sound great on paper, but what if working five more years could significantly improve your quality of life in retirement? Alternatively, are you prepared to make the sacrifices to your lifestyle today to achieve a more aggressive timeline?
Accounts for the unexpected
Recessions happen. So do bear markets. You might lose your job at a certain point or face unexpected medical bills. A good financial plan can help you prepare for these risks and see what kind of impact they might have on your long-term goals.
Keep in mind: Not all unexpected events are negative. You might receive an unexpected inheritance from a relative—a financial advisor can provide guidance around how to use the windfall, from boosting your retirement savings to establishing a charitable fund that honors their legacy.
You’ll notice that we didn’t go into detail about investments when discussing a financial plan. That’s because building and managing a portfolio of investments are simply one part of a financial plan.
5 Times a Financial Plan is Particularly Helpful
While it’s always a good idea to have a financial plan, they can be particularly important during periods of change. Big changes can be stressful, and it’s easier to make mistakes when there’s a lot going on. Having a financial plan can help you avoid costly (and potentially irreversible) money mistakes.
1. You’re getting close to retirement
As you near retirement, you’ll want to get a solid handle on whether you have enough money saved. You also want to ensure your expectations for retirement are realistic.
If there’s a discrepancy between where you’re at and where you want to be, a financial plan can help you make adjustments. A good financial advisor will make sure the plan aligns with both your present circumstances and future goals.
2. You’re getting married (or divorced)
We tend to focus on the emotional part of marriage (who doesn’t love love?), but it’s important to recognize that marriage is also a financial decision. Whether (and how) you and your spouse will share income, expenses, debt, and more can be critical to a long-term partnership.
Creating a financial plan with an advisor can also help ensure you’re on the same page about long-term goals like kids and college, lifestyle in retirement, and whether you may want to support parents or family members as they age.
3. You get a big inheritance or bonus
Generally, getting a lump sum payment is cause for celebration; it can ease concerns or push you toward your goals. However, go a level deeper, and you have a range of factors to consider. For instance, do you owe tax on the money, and how much? Are there restrictions on when and how you can access the funds?
Beyond that, a financial plan can help you evaluate how to best use an influx of cash. Will you get more bang for your buck by paying down debt or putting the money toward retirement? A good financial advisor won’t tell you how to spend the money, but they’ll help you make informed decisions and avoid potential pitfalls.
Choose the Right Advisor
As we mentioned earlier, not all financial advisors engage in comprehensive financial planning, and not every financial plan takes a big picture approach. It’s important to look for a financial advisor that you’re comfortable with. Ask how they approach financial planning, as well as any investment management services you may be interested in.
If you have questions about building a financial plan with Bogart Wealth, or how a Bogart Wealth Advisor might be able to help you, contact us today.
