Chris Haviaris, CPA, CFP developed her unique perspective and uncanny unability to blend the practical and the profound over 25 years of working with people and their money, and nearly that long practicing and studying yoga. She is the founder of TTR Wealth Partners, LLC, and lives in the Hudson Valley with her two children and their very zen cat, Maddie.

The Meaning of Fiduciary Financial Planning, Part II

The Meaning of Fiduciary Financial Planning, Part II

If you haven't already, check out Part I of this post, looking closely at the word Fiduciary.  Here, we'll take a deep dive into what I mean by REAL Financial Planning. Given that Carl Richards, the NYTimes Sketch Guy, first brought that phrase do my attention, it's only fitting that I use one of his sketches here. Thanks Carl!

Before we get into the planning process itself, let's look at prerequisites.  What sets you up for good financial planning, whether you use hire a planner or do it yourself.   Good planning, financial or otherwise, requires an ability and willingness to:

  1. Be proactive - By it's nature, planning is a future focused endeavor.  If you're someone who's pre-disposed to focusing on the past, fear not.  This is a learned behavior that improves with practice.
  2. Take personal responsibility - If you want to direct the course of your life, you must own it. You don't find much finger-pointing among the financially independent.
  3. Be open - to ideas and exploration.  And, as importantly, to discomfort.  You may need to face some stuff you'd rather avoid. Breathe. Be kind to yourself. And keep going.
  4. Engage your creativity - Planning at its best is a creative act. Most writer's don't edit while they create.  The allow the flow of their vision to carry them, and clean up the details later.
  5. Look deeply and honestly - at where you've been, where you are, where you want to go. That's round one.  Round two is looking at what it's going to take to get there.  Remember, breathe.
  6. Practice foresight - You must give your future self a prominent seat at the table. Even the best planner is not there with you in the dark of the night, but your future self lives inside you. That's the voice that should guide and encourage you when you feel lost or discouraged. 
  7. Embrace the journey - Planning is not an event, it is a process. You wouldn't expect to stay fit by going to the gym every few years.  You go regularly. It becomes a part of how you live, of who you are.

Now let's look at the process of financial planning itself.  The CFP® Board, which certifies financial planners, defines 6 steps of the financial planning process.  It's written for those working with a professional, so I'll modify a bit:

  1. Gather Data
  2. Establish Goals
  3. Evaluate Status  
  4. Explore Options
  5. Set Course
  6. Monitor Progress

It's so common for people to want to jump right to thinking about investments, which would be a part of step 5.   RESIST THIS TEMPTATION!  If I meet with a new client and picking funds is the first thing, or in some cases the only thing, they want to talk about, and they haven't yet given steps 1-4 their proper attention, I refer them to someone else. And before I send them on their way, I offer a bit of education about the difference between a real investment advisor and a salesman. But I digress, so let's cap that off by saying smart investing is important, but it's only one small part of financial planning. And philosophy, approach, and discipline matter far more than specifics.

Lastly, let's look at the components of a good financial plan.  You're probably as tired of bullet lists as I am, so let's go a visual route for a change.  Now, don't get overwhelmed, you don't need to do all this in one sitting, and some of these areas may require more than a few minutes of your time every so often.  But they all should be considered.  

Well, I think that's pretty much enough for now.  I've got a yoga class to get to, and you probably want some time to absorb.  A nap may help.  

Shout if you need me!

Xo,
Chris

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