The Key To A Financial Plan

The key to a successful financial plan is not the numbers inputted into the planning software–those are important but not the most essential parts of creating a financial plan. 

Before we go any further, let’s define “success” for a financial plan. A successful financial plan allows the individual or family to define their goals, align their money with their values, address risks and protect the family and loved ones, and most importantly, is implemented, followed, and updated as necessary as goals and values change.

The key to a successful financial plan lies in the last part of the definition above–the plan must be implemented, followed, and updated as necessary.

If a financial plan is not actually implemented and followed then it is not an actual plan–it’s a what-if scenario that shows what MIGHT happen if it were followed. Unfortunately, spending years at a company helping people with their employer retirement plan, I created many “financial plans” that were never implemented; this is the result of working at a company that helped individuals with their employer retirement plan and choosing to focus on financial planning to grow the clients who worked with me—many said they wanted financial plans, few actually implemented.

It did not take long to realize those who implemented the plans I created were emotionally invested in their plan–thankfully, these individuals and families became my clients and most of them still work with me today. Those who did not implement the plans had no real connection to the financial plan–the plan consisted of the stereotypical goals of retirement and maybe college planning. Both are relevant and real goals but don’t tend to get people excited about planning and don’t often speak to the individual’s values.

Looking back and comparing the implemented plans vs. the non-implemented plans, the individuals behind the plans that were put into action better understood who they were, what they valued the most, and the life they wanted to create. The conversations that contributed to the implemented plans were hours long, emotional, and detailed. In stark contrast, the conversations that contributed to the non-implemented plans were short and lacked details of any significance.

Many financial advisors and clients want to jump straight to the numbers in a financial plan, but if the numbers in the plan lack meaning to the client it is unlikely that the plan will be implemented and less unlikely that it will be followed if it happens to get set into motion. The numbers in a financial plan are secondary to the authentic life the client is pursuing.

The client’s authentic life will determine how much should be saved, where it should be saved, how it should be invested, how much and what type of insurance is necessary, how estate planning documents should be constructed, opportunities for tax savings, and more.

Every authentic life will have different recommendations that are influenced by the uniqueness of the goals and values of the individuals, which is why a successful financial plan does not start with the numbers.

If you’re serious about creating a financial plan to guide your financial decisions in the Pursuit of your authentic life, work to get to know your Self, which can be done by connecting and aligning your spirit, mind, and body in the ways that work best for you.

Once you know YOU, you can start plugging in numbers, creating your plan, implementing it, and updating it as your authentic life evolves.

See you tomorrow and keep pursuing,

JC