Financial Planning Indianapolis
Comprehensive Financial Planning: What It Is, Why It Matters
Your approach to building wealth should be built around your goals & values.
Provided by Robert Nash
What does “comprehensive financial planning?” really mean? As you invest and save for retirement, you will no doubt hear or read about it. You might be wondering what comprehensive financial planning entails, and why knowledgeable investors request this kind of approach.
While the phrase may seem ambiguous to some, it can be simply defined.
Comprehensive financial planning is about building wealth through a process, not a product.
Financial products are everywhere, and simply putting money into an investment is not a gateway to getting rich, nor a solution to your financial issues.
Comprehensive financial planning is holistic.
It is about more than money. A comprehensive financial plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others?
Comprehensive financial planning considers the entirety of your financial life. Your assets, your liabilities, your taxes, your income, your business – these aspects of your financial life are never isolated from each other. Occasionally or frequently, they interrelate. Comprehensive financial planning recognizes this interrelation and takes a systematic, integrated approach toward improving your financial situation.
Comprehensive financial planning is long-range.
It presents a strategy for the accumulation, maintenance and eventual distribution of your wealth in a written plan to be implemented and fine-tuned over time.
What makes this kind of planning so necessary? If you aim to build and preserve wealth, you must play defense as well as offense. Too many people see building wealth only in terms of investing – you invest, you make money, and that is how you become rich.
Investing is only a small part of the story. The wealthy plan to minimize their taxes and debts. They also adjust their wealth accumulation and wealth preservation tactics in accordance with their personal risk tolerance and changing market climates.
Basing decisions on a plan prevents destructive behaviors when markets turn unstable. Impulsive decision-making is what leads many investors to buy high and sell low. Buying and selling in reaction to short-term volatility is a day trading mentality. On the whole, investors lose ground by buying and selling too actively. The Boston-based investment research firm Dalbar found that from 1994-2013, the average retail investor earned 5% a year compared to the 9% average return for U.S. equities – and chasing the return would be a major reason for that difference. A comprehensive financial plan – and its long-range vision – helps to discourage this sort of behavior. At the same time, the plan – and the financial professional(s) who helped create it – can encourage the investor to stay the course.1
A comprehensive financial plan is a collaboration & results in an ongoing relationship.
Since the plan is rooted in goals and values, both the investor and the financial professional have spent considerable time on its articulation. Trust strengthens as both parties live up to their responsibilities. That continual engagement promotes commitment and a view of success.
Think of a comprehensive financial plan as your compass. Accordingly, the financial professional you work with can serve as your navigator on the journey toward your goals.
The plan provides not only direction, but an integrated strategy to better your overall financial life. As the years go by, this approach may do more than make money for you. It may help you to build and retain lifelong wealth.
Robert Nash can be reached at www.rlnash.com.
Robert Nash offers Securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA www.finra.org / SIPC www.sipc.org to residents of AZ, CA, CO, FL, GA, IN, KY, MI, NM, OH, PA, SC, TX. Advisory services through Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Cambridge and Nash & Associates are not affiliated.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 – fool.com/investing/general/2015/03/22/3-common-mistakes-that-cost-investors-dearly.aspx [3/22/15]