See a Sample Financial Plan
By Net Worth Advisory Group
Many of us have heard over and over the benefits of working with a financial advisor to create a financial plan. But have you ever wondered what that actually looks like? And how to know if it’s worth the fees before you actually hire an advisor? If so, this article is for you.
Because we develop custom financial plans for each client, it’s no easy task to provide one without working with you extensively. However, we wanted to create something that could help you better understand what your potential financial plan could look like so you can see the benefits a plan could bring to your financial life. If you choose to work with us, here is a sample of what you can expect.
What Does a Financial Plan Include?
First, you may be wondering about what goes into a comprehensive plan. Financial plans often address a myriad of concerns and goals, from tax planning, to investments, to retirement income planning. Depending on your needs, your plan may narrow in on one element or address multiple goals you’d like to pursue over time. Whatever you choose to focus on, your financial plan is designed to serve as your road map, helping you pull all the moving parts of your finances together so you can navigate the years before, during, and after your transition to retirement.
We believe a good financial plan should give you a detailed, complete view of your current financial situation, a thorough modeling of where you want to be, and the actions you need to take to reach those goals. It should address all the pieces of your financial puzzle, from stresses and fears to your values and dreams, and include risk factors, cash flow, retirement, estate planning, taxes, education, insurance, and income strategies to help bring you clarity and guidance. It is through our planning process that we help you prepare for life’s expected and unexpected circumstances.
The result is a simple yet powerful road map to guide you toward financial freedom.
See a Sample Financial Plan
We’ve developed a sample financial plan that reflects a portion of our planning process. It looks at the investment strategy of a fictional couple (Mike and Amy Sample) and how we developed it, including identifying their goals, creating a balance sheet, reviewing their cash flow, and more.
After reviewing the basics of Mike and Amy’s financial situation, we identified two key areas to become the primary focus of their planning: revamping their investment strategy and planning for retirement.
Mike and Amy’s original asset allocation is outlined below. Over 90% of their investable assets were in stocks. Since they were hoping to retire in the next 5-10 years, we created a proposed asset allocation of 70% stocks and 30% bonds. This would help improve their overall portfolio by decreasing their exposure to unnecessary risk.
We took the plan one step further by breaking down the current versus target level of diversification. As you can see in the table below, the Samples were significantly overallocated in the large-cap growth, international growth, and international value asset categories. They were also under-allocated in the corporate bond category. We proposed a reduction in the stocks and increase in the corporate bonds to bring their asset allocation into target range.
Once we had the target allocation outlined, we were able to provide specific investment recommendations as illustrated below.
Though this is not intended as advice for any clients except our fictional couple, these tables outline how our process works. We start with an overview, or big picture; in this case, knowing that we want to adjust the asset allocation from 90% equities to 70% equities. Then we drill down into the specifics by first identifying which asset categories to work with and then which specific investments to buy.
The next major component of our financial plan is retirement. In Mike and Amy’s case, we looked at three specific scenarios to see what retirement would look like at different ages. Then we outlined what their retirement spending could look like based on which age they retire. We also analyzed which age makes the most sense for both Amy and Mike to claim Social Security benefits.
We compiled all this information in our “Financial Plan Notes & Action Items,” a one-page document that makes it easy for clients to reference in the future. Here is one section of that document:
As you can see, retiring at age 62 will allow the Samples to increase their annual spending by $10,000, and retiring at age 58 would require a substantial boost to their current savings plan.
Keep in mind that our plans are much more extensive, in-depth, and comprehensive than what we’re able to show here, but this is a good sample. It’s also important to note that this is only a hypothetical plan presented to illustrate what a client’s plan may resemble should they work with us. The characters and circumstances are completely fictional and are for illustrative purposes only. Be sure to seek the advice of a qualified professional for your particular situation and not rely upon any of the information herein to make personal financial decisions.
Ready to Get Started on Your Financial Plan?
Though financial planning can be complicated, it doesn’t have to be confusing. If you would like a detailed investment analysis or a second opinion on your current retirement plan, please reach out to us and we can discuss further how we can create a tailored financial plan for you. To learn more about our planning process, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory is an independent, fee-only, CERTIFIED FINANCIAL PLANNER™ and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement, and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.
As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. Of the estimated 800,000 financial advisors in the U.S., only 55,000 have earned the CFP® designation. All Net Worth advisors are either CFP® professionals or CFP® professionals in training.
Net Worth Advisory’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.