National Financial Planning Month

National Financial Planning Month

October 10, 2023

October is National Financial Planning month! 

What comes to mind when we say Financial Planning?

Here’s what a lot of people think Financial Planning covers: Investment Management. 

Here’s what Financial Planning actually covers: 

  • Exploring client attitudes, values & biases about money
  • Creating a savings & investing plan for various goals
  • Preparing for retirement: accumulation phase
  • Creating income in retirement: distribution phase
  • Ensuring you have adequate life insurance coverage
  • Planning for College/Other Generational Wealth Strategies
  • Identifying tax reduction/management techniques
  • Keeping up to date with legislation changes

In a recent 2023 Schwab Modern Wealth Survey, only about one-third (35%) of Americans have plotted their goals and documented a financial plan. Among those who do have a financial plan, 7 in 10 say it makes them feel more in control of their finances and 9 in 10 say they feel confident that they will reach their financial goals.

Growing and retaining wealth takes more than just investing. At SMB, we lead with Financial Planning, which means that in addition to helping you create your investment portfolio we create a Financial Plan which incorporates so much more. Let’s explore some of the added value that comes from a Financial Plan.

Exploring client attitudes, values & biases about money

This is often called BeFi in the Financial Services industry, BeFi is short for Behavioral Finance. Behavioral Finance considers that people’s behavior is sometimes not as rational as traditional economic models would predict and that behavior is a huge factor in financial success. Matching goals and a plan to attitudes and values creates a customized bespoke plan for clients so that their values are expressed, and true wealth is achieved. 

Creating a savings & investing plan for various goals

This crucial step is how we take client goals from a wish to a reality. Am I on the right track? Consistently saving and consistently investing that savings will take you very far. We love to help people reach their goals. We help build consistency by adding accountability to your plan. Our semi-annual strategy meetings create accountability to ensure that you are making progress or find out what is preventing forward motion.

Preparing for retirement: accumulation phase

Retirement has parts and phases that are important to pay attention to. There is a lot of preparation needed to achieve a successful retirement. As previously mentioned, consistent saving and investing in your pre-retirement years are important but the two years in advance of a planned retirement date are paramount. At SMB, we have coined the term “Runway to Retirement.” In the two years leading up to your retirement date, we will identify all sources of income, track spending and itemize expenses. This helps achieve clarity. When we have this information, we know what to solve for, and this attention to detail provides clients with peace of mind about making this major life change.

Creating income in retirement: distribution phase

 “What happens with all my accounts when I retire?” is one of the most common questions we are asked.

Creating your income for retirement is something we specialize in. The combination of the visioning and tracking of the numbers we do during the two-year runway is the fine-tuning work necessary to develop and execute a retirement income distribution strategy, i.e., how to create a paycheck for yourself using your assets.

Ensuring adequate life insurance coverage

Bottom line: If you have dependents, now is the best time to get life insurance. Don’t leave them unprotected.  But how much life insurance is the right amount? Great question! We will explore your insurance needs to determine the appropriate amount and make sure it works with your cash flow. 

Planning for College/Other Generational Wealth Strategies

We love the fulfillment that comes from planning for college and other Generational Wealth strategies. Planning now for the needs in the future is so effective, especially when it involves young investors and the children of our clients who have the incredible gift of time on their side. 

Identifying tax reduction/management techniques

There is so much opportunity in the tax planning arena. The problem is, it’s hard to see and the details are often time-consuming and not interesting for the lay person. We understand that taxes may not be the most exciting topic, but by incorporating your tax situation, we can work together to help minimize your tax liability. Part of the financial planning process is to review previous tax returns and identify tax strategies that are available to you.   

Keeping up to date with legislation changes

The back and forth of Student Loan Repayment legislation lately is one example of how rapidly legislation can change and how big of an effect it can have on your finances. The Secure Act 2.0 is another example of big legislative changes that affect all of us.

For example: 529 plans changed significantly with Secure 2.0. Thanks to this landmark legislation that was passed in December 2022, beneficiaries of 529 plans can roll over up to $35,000 during their lifetime to a Roth IRA (effective 2024). This is tax management, retirement planning and generations wealth all rolled up in one!

As you can see from all these areas, leading with Financial Planning holds significant return on investment (ROI) outside of portfolio returns. So, if you hear anyone mistaking Financial Planning for simply Investment Management, take the time to share what else it includes and wish them a Happy National Financial Planning Month!  

If anyone asks you about SMB Financial Strategies, LLC, it’s a high compliment to hear, “They lead with Financial Planning.”