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Financial Planning - Taking Control of Your Financial LIfe

Introduction:

Why CareForTheTroops Cares About Financial Management

We believe Financial Management is an essential element to the well-being and psychological health of the military individual or military family. Accordingly, we are including it on this web site so that the visitor to this site can at least have a primer to get started on this very important matter.

WHAT IS FINANCIAL PLANNING ANYWAY?

Let’s say your CO (Commanding Officer) assigns a mission to you. How would you go about accomplishing it?  Would you:

  1. Determine what goals must be achieved in what time frame, study the terrain and the enemy, review available resources, plan a sequence of actions to achieve the goals, and then execute the plan?
  2. ... or ...
  3. Move forward with no clear goals or time frame, no idea what the terrain or the enemy looks like, no idea what resources are available, no plan what to do next, and just hope that things will be okay?

Now let’s say your mission is to buy a house, or to send your kids to college, or to retire comfortably.  How would you go about accomplishing those?  Let’s face it.  Most of us tend to go with option 2.

This is where financial planning becomes useful.  “Financial planning” may sound like something for rich people with a lot of money or for big-time stock and bond investors … but it is not. Financial planning is about life.  It is about determining your goals and figuring out how to use the financial resources you have in order to reach your goals. It is about accomplishing your mission

Financial Planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life.  Financial planning is a process, not a product. 




10 Questions to Ask When Choosing a Financial Planner

What experience do you have?

Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to your situation. Choose a financial planner who has experience counseling individuals on their financial needs.

What are your qualifications?

The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNERT professional or CFP practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), a Chartered Financial Consultant (ChFC), or a member of the Financial Planning Association (FPA) or National Association of Personal Financial Advisors (NAPFA). . Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with relevant professional organizations.

What services do you offer?

The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.

What is your approach to financial planning?

Ask the financial planner about the type of clients and financial situations she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas, as needed.

Make sure the planner's viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.

Will you be the only person working with me?

The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.

How will I pay for your services?

As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided. Planners can be paid in several ways:
  •  A salary paid by the company for which the planner works. The planner's employer receives payment from you or others, either in fees or commissions, in order to pay the planner's salary.
  •  Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income. Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.
  •  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. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.

How much do you typically charge?

While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner's hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

Could anyone besides me benefit from your recommendations?

Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.

Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?

Several government and professional regulatory organizations, such as FINRA (formerly NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

Can I have it in writing?

Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.


Foundation For Financial ManagementThe following information is provided through the Foundation for Financial Planning, a nonprofit charitable organization with the mission of helping people take control of their financial lives by connecting the financial planning community with people in need. This is achieved through the support of financial life skills education and pro bono advice.

Financial Planning BookletJust as there are systematic steps for planning a task, there are systematic steps for planning your finances. Below are some steps:

  1. Gather Information
  2. Determine Your Goals
  3. Assess the Situation
  4. Create an Action Plan
  5. Execute the Plan
  6. Monitor the Plan

Detailed information as well as sample planning forms are available in a free booklet from the Foundation for Financial Planning. Click here to download a copy "Accomplishing Your Financial Mission", or email the Foundation for Financial Planning at mail@foundation-finplan.org.


Certified Financial Planner

Benefits

Who can benefit from the services of a financial planner? People seeking an objective, third-party perspective on what are often emotional, difficult decisions. And in today's hectic world, it can be beneficial to have a financial planning expert help to make sure you stay focused and follow through with your financial plans. Often a specific event or need will trigger the desire for professional financial planning guidance. These might include:

Procrastination is the greatest enemy of financial independence, and using a financial planner will keep you on track. There are some other advantages to using a planner. A financial planner will address complex concerns, such as calculating how long your retirement capital will last or maximizing tax strategies. A good financial planner will work with other professionals, such as stockbrokers, accountants, and insurance agents, to coordinate their efforts with your overall financial needs.

Have a question? Click here to connect to ask a financial planner a question with "no strings attached". This service is intended for educational purposes only. Please be aware that complete data is not being gathered, alternatives are not being considered and a financial planning engagement is not being established.

Financial Check-up Form

Everyone needs to have a financial check-up from time to time. Here is a Financial Prescription with helpful resources for a number of conditions. Click Here to view a PDF version which you can also print out or download.

How to Choose a Planner

You may be considering help from a financial planner for a number of reasons, ranging from buying a new home, to planning for retirement, to saving for your children's education, or simply to get your finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.

You should interview and evaluate several financial planners to find the one that's right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs.

To Find a Financial Planner

Certified Financial Planner Board of Standards (CFP Board)

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP certification and upholding it as the recognized standard of excellence for personal financial planning.
http://www.cfp.net/search/

Financial Planning Association® (FPA®)

The Financial Planning Association® is a leadership and advocacy organization for those who provide, support and benefit from financial planning. One of their most recognized resources is PlannerSearch, a unique tool that allows the public to find a financial planner who will deliver advice using an ethical, objective, client-centered process.
http://www.fpaforfinancialplanning.org/FindaPlanner/

The National Association of Personal Financial Advisors (NAPFA)

The National Association of Personal Financial Advisors is the nation's leading organization of Fee-Only comprehensive financial planning professionals. NAPFA members are trusted, objective financial advisors for consumers and institutions alike.
http://findanadvisor.napfa.org/

Need Credit Counseling?

National Foundation for Credit CounselingThe National Foundation for Credit Counseling (NFCC), Inc., promotes the national agenda for financially responsible behavior and builds capacity for its Members to deliver the highest quality financial education and counseling services. The NFCC is the nation's largest and longest serving national nonprofit credit counseling network, with more than 100 Member agencies and nearly 850 offices in communities throughout the country. Each year, NFCC Members assist 4 million consumers, helping many to drive down their debt and take control of their finances.

NFCC Members, often known as Consumer Credit Counseling Service (CCCS) or other names, can be identified by the NFCC member seal. This seal signifies high standards for agency accreditation, counselor certification and policies that ensure free or low-cost confidential services. NFCC Member Agencies can be reached in person in communities nationwide, on the phone toll-free at (800) 388-2227, or online. The NFCC national office is located in Silver Spring, Maryland.