Although financial plans do not have a generic template, these plans typically consist of an investor’s future life goals, future wealth transfer plans and future expense levels. Extrapolated asset values determine whether the client has sufficient funds to meet future needs. A good financial plan can alert an investor to changes that must be made to ensure a smooth transition through life’s financial phases, such as decreasing spending or changing asset allocation. Financial plans should also be fluid, with occasional updates when financial changes occur.
ELEMENTS OF A FINANCIAL PLAN
Financial plans are based on an individuals clearly defined financial goals, including funding a college education for the children, buying a larger home, starting a business, retiring on time or leaving a legacy. Financial goals should be quantified and set to milestones for tracking.
COMPREHENSIVE RISK MANAGEMENT PLAN
Identify all risk exposures and provide the necessary coverage to protect the family and its assets against financial loss. The risk management plan includes a full review of life and disability insurance, personal liability coverage, property and casualty coverage, and catastrophic coverage.
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