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What Is Financial Planning?:

Financial planning is the process of meeting your life goals through the proper management of your finances.  Life goals can include buying a home, saving for your child’s education, planning for retirement, etc.  The comprehensive financial planning process consists of 6-Steps that help you take a comprehensive, “big picture” perspective, at where you are in life, taking into account your finances, insurance, investments, risks, assets & liabilities, etc.  Using these 6-Steps, you can work out where you are now, what you may need in the future, and what you must do to reach any goals you set.  The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet those goals given your current situation and future plans. 

The Benefits of Comprehensive Financial Planning: 

Comprehensive financial planning provides direction and meaning to life’s decisions.  It allows you to understand how each financial decision you make affects other areas of your finances.  For example, buying a particular investment might help you pay off your mortgage faster or it might delay your retirement significantly.  By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals so that you can adapt more easily to life changes and feel more secure that your goals are on track. 

Can You Do Your Own Comprehensive Financial Planning?: 

Some personal finance software packages, magazines or self-help books can help you do a form of “financial planning”; however, you may decide to seek help for the type of comprehensive financial planning we discuss here from a professional QFP - Qualified Financial Planner, particularly if you need more expertise in certain areas of your planning.  For example: 

·         a QFP advisor can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.

·         if you want to get a professional opinion about the financial plan you developed for yourself.

·         if you don’t feel you have the time to spare to do your own financial planning.

·         if you have an immediate need or unexpected life event such as a birth, inheritance or major illness.

·         if you feel that a professional advisor could help you improve on how you are currently managing your finances.

·         if you know that you need to improve your current financial situation but don’t know where to start. 

What Is A QFP - Qualified Financial Planner: 

A QFP advisor is someone who uses the financial planning process to help you, with a comprehensive perspective, to figure out creative ways of meeting your life goals.  A QFP can take a comprehensive perspective of your situation to make financial planning recommendations that are right for you.  The QFP advisor can look at all of your needs including budgeting, saving, taxes, investments, insurance and retirement, or the QFP advisor may work with you on a single financial issue but within the context of your overall situation.  This comprehensive approach to your financial goals, whether modularly applied or otherwise, sets the QFP advisor apart from other financial advisors who may have been trained or best able to focus on only one particular area of your life. 

Types of Financial Advisors Who May Work With You: 

In addition to being qualified to provide you with general financial planning services, many financial advisors are also registered as investment advisors or hold insurance or securities licenses that allow them to buy or sell products.  Other advisors may have you use more specialized financial advisors to help you implement their recommendations.  With the right education and experience, each of the following advisors could take you through the financial planning process.  Ethical financial planners, however, will refer you to one of the following allied professionals for services that they do not or cannot provide.  Similarly, these advisors should refer you to a QFP advisor if they cannot meet your comprehensive financial planning requirements. 

Financial Planners - Many financial planners have earned the CERTIFIED FINANCIAL PLANNER™ or CFP® designation, and others the Chartered Financial Consultant (ChFC) or Personal Financial Specialist (CPA-PFS) designations. All of these are better known under the unifying designation QFP - Qualified Financial Planner, granted to those who are Members of the INTERNATIONAL ASSOCIATION of QUALIFIED FINANCIAL PLANNERS (www.IAQFP.org), and it is these professionals who are more widely recognized as the one's to work with you using the comprehensive 6-Step financial planning process, or, at a minimum, the comprehensive perspective described herein in segmented applications of that process. 

Accountants - provide you with advice on tax matters and help you prepare and submit your tax returns to the Internal Revenue Service.  The State(s) in which they practice must license all accountants who practice as Certified Public Accountants (CPAs). 

Estate Planners - provide you with advice on estate taxes or other estate planning issues and put together a strategy to manage your assets at the time of your death.  While attorneys, accountants, financial planners, insurance agents or trust bankers may all provide estate planning services, only attorneys can prepare legal documents such as wills, trusts and powers of attorney.  Many estate planners also hold the Accredited Estate Planner (AEP) designation. 

Insurance Agents - are licensed by the State(s) in which they practice to sell life, health, property and casualty or other insurance products.  Many insurance agents hold the Chartered Life Underwriter (CLU) designation.  Financial planners may identify and advise you on your insurance needs, but can only sell you insurance products if they are also licensed as insurance agents. 

Investment Advisors - are anyone who is paid to provide securities advice and who must register as an investment advisor with the Securities and Exchange Commission or relevant State securities agencies, depending on the amount of money he or she manages.  Because financial planners often advise people on securities-based investments, many are registered as Investment Advisors or Investment Advisor Representatives.  Investment Advisors cannot sell securities products without a securities license.  For that, you must use a licensed securities representative such as a stockbroker. 

Stockbrokers / Registered Representatives - Stockbrokers are licensed by the State(s) in which they practice to buy and sell securities products such as stocks, bonds and mutual funds.  They generally earn commissions on all of their transactions.  Stockbrokers must be registered with a company that is a member of the National Association of Securities Dealers (NASD) and pass NASD-administered securities exams, and are subject to NASD oversight & regulations. 

Be Sure You’re Getting Financial Planning Advice: 

The government does not regulate financial planners as financial planners, instead, it regulates planners by the services they provide.  For example, a planner who also provides securities transactions or advice is regulated as a Stockbroker or Investment Advisor.  As a result, some financial advisors may use the term “financial planner” inaccurately, and to add to the confusion, many of the financial advisors described herein offer quasi types or degrees of “financial planning services”.  To be sure that you are getting qualified & comprehensive financial planning advice, ask if the advisor follows the 6-Step Financial Planning Process described below and if that advisor is a member of the QFP Professional.

~The 6-Step Comprehensive Financial Planning Process~ 

Establishing and defining the client-planner relationship - The QFP advisor should clearly explain or document the services to be provided to you and define both his and your responsibilities.  The planner should explain fully how he will be paid and by whom.  You and the QFP advisor should agree on how long the professional relationship should last and on how decisions will be made. 

Gathering client data, including goals - The QFP advisor should ask for information about your financial situation.  You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk.  The QFP advisor should gather all the necessary documents before giving you the advice you need. 

Analyzing and evaluating your financial status - The QFP advisor should analyze your information to assess your current situation and determine what you must do to meet your goals.  Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. 

Developing and presenting financial planning recommendations and/or alternatives - The QFP advisor should offer financial planning recommendations that address your goals, based on the information you provide.  The planner should go over the recommendations with you to help you understand them so that you can make informed decisions.  The planner should also listen to your concerns and revise the recommendations as appropriate. 

Implementing the financial planning recommendations - You and the QFP advisor should agree on how the recommendations will be carried out.  The planner may carry out the recommendations or serve as your “coach,” coordinating the whole process with you and other professionals such as attorneys or accountants. 

Monitoring the financial planning recommendations - You and the QFP advisor should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he/she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. 

Common Mistakes Consumers Make When Approaching Financial Planning: 

1.      Don’t set measurable financial goals.

2.      Make a financial decision without understanding its’ effect on other financial issues.

3.      Confuse financial planning with investing.

4.      Neglect to re-evaluate financial plan periodically.

5.      Think that financial planning is only for the wealthy.

6.      Think that financial planning is for when they get older.

7.      Think that financial planning is the same as retirement planning.

8.      Wait until a money crisis to begin financial planning.

9.      Expect unrealistic returns on investments.

10.   Think that using a financial planner means losing control.

11.   Believe that financial planning is primarily tax planning. 

How To Make Financial Planning Work For You: 

You are the focus of the financial planning process and as such the results you get from working with a financial planner are as much your responsibility as they are those of the planner.  To achieve the best results from your financial planning engagement, you will need to be prepared to avoid some of the common mistakes shown above by considering the following advice: 

I.                     Set measurable financial goals.  Set specific targets of what you want to achieve and when you want to achieve results.  For example, instead of saying you want to be “comfortable” when you retire or that you want your children to attend “good” schools, you need to quantify what “comfortable” and “good” mean so that you’ll know when you’ve reached your goals. 

II.                   Understand the effect of each financial decision.  Each financial decision you make can affect several other areas of your life.  For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child’s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated. 

III.                  Re-evaluate your financial situation periodically.  Financial planning is a dynamic process.  Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase, or change of job status.  Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals. 

IV.                Start planning as soon as you can.  Don’t delay your financial planning.  People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life.  Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies. 

V.                  Be realistic in your expectations.  Financial planning is a common sense approach to managing your finances to reach your life goals.  It cannot change your situation overnight, it is a lifelong process.  Remember that events beyond your control, such as inflation or changes in the stock market, or interest rates, will affect your financial planning results. 

VI.                Realize that you are in charge.  If you’re working with a financial planner, be sure you understand the financial planning process and what the planner should be doing.  Provide the planner with all of the relevant information on your financial situation.  Ask questions about the recommendations offered to you and play an active role in decision-making. 

Some Common Questions About Financial Planning: 

Who can use the term “Financial Planner”? 

The government does not regulate financial planners as financial planners; instead, it regulates planners by the services they provide.  As a result anybody can “hang out a shingle” and call himself or herself a “financial planner or advisor”.  Therefore, we recommend that if you desire a financial planner  vs. a financial services person, that you seek out one with the QFP designation.  You can find a QFP referral by contacting IAQFP at:  info@IAQFP.org, or by visiting their web site at:  www.IAQFP.org.

Why should I choose a QFP - QUALIFIED FINANCIAL PLANNER over another type of financial "advisor"?  In general, if you’re not sure what advice you need, start with a QFP advisor.  A QFP advisor will focus on your needs first, and before recommending any course of action.  QFP advisors have been trained to take a broad look at your financial situation, while accountants, investment advisors, stockbrokers or insurance agents may only focus on one particular area of your financial life.  Always ask a “financial planner / advisor” what qualifies him or her to offer financial planning services. 

What is the best age to start financial planning?  While it is true that the younger you start the more beneficial the process will be, financial planning is worthwhile at any age.  Although younger people may have more decisions to make regarding their financial lives, changing laws and circumstances can lead middle-aged people and seniors to have to adjust their financial plans as well.  Changes in tax law, for example, may require many people to revisit certain investments or estate plans, and adequate disability planning becomes more important as people age. 

How are financial planners paid?  There is currently no uniform method by which financial planners are paid.  A planner can be paid by a salary paid by the company for which the planner works; by fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income; by commissions paid by a third party from the products sold to you to carry out the financial planning recommendations (this is my method of compensation); or by a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. 

Do I have to pay a financial planner for the first interview?  How much does a planner typically charge?  Most financial planners will provide you with one free 30 minute meeting to talk about your reasons for wanting to work with them as we do.  During these initial interviews, the planners will also decide if they can help you and explain how they would work with you.  Like other professionals, the rates many financial planners charge may depend on their experience, geographic location, level of services, and your needs.

While the “financial planning profession” continues its development there remains inconsistent licensing requirements for those who call themselves "Financial Planners"; therefore, it is recommended that you select a QFP, the one designation unifying all those who have met equally rigorous exam, education, ethics, and experience requirements and in so doing have earned Financial Planning specific designations. 

Paul M. League, QFP, CFP® employs the Financial Planning methodology in modular or segmented applications of that process, but does not offer FP services.  Please see the following link for our - "Financial & Investment Advisory Compensation Arrangements & Our Value-Added Advantage".  Presently, formal written “Financial Plans”, are not offered on any kind of a fee basis.

While having completed many educational programs, including the prestigious certifications as a CFP® certificant (CERTIFIED FINANCIAL PLANNER™), and the heightened ethics and continuing education requirements as a QFP (Qualified Financial Planner), my professional services to clients are based solely upon the authority vested under various federal and/or state securities and/or insurance licenses, for which I have also met stringent examination and licensing requirements, and for which I conduct continuing professional education and compliance with laws and regulations of various States, their Departments of Insurance, the National Association of Securities Dealers, the SEC, my Broker/Dealer and their Registered Investment Advisory firm Royal Alliance Associates, Inc. For more information on my style of investment & financial advice please click here:

• Active Asset Allocation Methodology
• Active-Disciplined Asset Allocation Methodology
• Industry/Sector Rotation Investment Methodology

A FREE 30-minute complimentary initial meeting, to talk about the prospects of utilizing Paul’s services, is also cordially offered to interested parties.

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Contact Us Today!  Phone:  1.800.482.5347 / www.LeagueFinancial.com / Info@LeagueFinancial.com

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