Sometimes the biggest role of a financial

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Sometimes the biggest role of a financial professional is to help clients think clearly and in an organized manner about their own retirement. When money is involved, emotions can be amplified. One way to control emotions is to remain as objective as possible, and a written financial plan is part of that process. A written financial plan is a document that details current investments, assumptions about savings plans, investment growth rates, the rate of inflation, and the desired retirement date. A financial plan will roll all of these items together to provide an idea of the likelihood of a client achieving their goals. The financial plan can also be thought of as a strategic plan to get from the present to a future- oriented goal. It is imperative to understand that the strategy will need to be dynamic, which means that outside forces will act upon the plan and the plan will then need to adjust. The financial professional may also help their client with insurance needs. Other than life insurance, one of the biggest concerns is long-term care insurance , which deals with end-of-life care. This topic will be covered in greater detail later. Sometimes in the course of discussing financial situations, a financial planner will uncover estate planning needs. It is very important to understand the options available, but official estate planning work requires referral to an estate planning attorney in the same way that tax planning is best outsourced to a CPA. It is also extremely important for a financial professional to coordinate efforts with a client’s other advisors, like attorneys and accountants. It would not be good for a financial professional to recommend a series of transactions that would create a tax liability for a taxpayer who has a very sensitive tax situation. Communication can prevent problems. Q: Two financial planning students are discussing their career intentions. One says to the other that they are considering a career in personal financial planning because they like the fact that it is a relatively precise science that involves applying a formula to a client and coming up with a savings goal. They like the certainty and predictability of this process that can simply be re-applied to multiple clients fairly easily. What would your comments be if you overheard this conversation?
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A: This student has mis-understood the profession. The “relatively precise science” of financial planning involves a great deal of estimation which will need to be adjusted for revised realities as the client progresses through time. The retirement planning process is a constantly moving target. The other fallacy is that every client is different. That is part of what keeps the job interesting…new clients and new challenges. There will not be a template that can just be applied to every client across the board. If that were the case, then a computer program could solve the problems without the assistance of a qualified financial professional.
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  • Spring '14
  • VOSS,JAMESA
  • Cash balance plan

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