Imagine planning a cross country road trip, ala The Griswold Family. You’ll be gone for three weeks, and you’ll drive over 3,000 miles. You’re going to stop at every National Park, State Park, County Park, Town Park, and Theme Park. The first thing you’ll do in planning your trip is to layout a checklist of items to bring, attractions you want to visit, places you’ll stay, etc.
The same can be said for putting together your financial plan. The first priority is determining where you want to go, and then putting together the necessary information to assemble your plan. Much like different components of a road trip work together (travel, hotel, food, attractions, gas, maps), every financial plan has different components that work together in securing your financial future.
So what’s needed to put together and maintain your financial plan? Read on:
Statements: Gather all current bank, brokerage and retirement statements you may have. Yes, you may have set up these statements to come electronically and have since forgotten the passwords. Sit down at your computer and spend 20-30 minutes printing out statements to review. You may be surprised by how much your investments have appreciated.
Insurance: You may have purchased various life insurance policies over the years, perhaps as long as 40 years ago. If you can’t find the actual policy or even a recent statement, write down the insurance company and everything you know about the policy.
Group Benefits: The biggest gap in most financial plan relates to benefits at your current and previous employers. You’ll want to identify group life and disability insurance, retirement benefits, pension funds, long term care insurance, and more. Reach out to your human resource department or login to your company benefits website to print out all information. If your employer has provided a group benefit book, add it to the pile of information to give to your adviser.
Tax Return: This task is particularly easy. If you work with a CPA to prepare your tax returns, send them an email asking them to send you and your adviser an electronic copy (pdf) of your tax returns for the last two years. If you prepare your own tax return, you should be able to do the same from Turbo Tax or other tax planning software. Otherwise, hard copies of actual returns work just fine.
Estate Planning Documents: Similar to tax returns, if you’ve had estate documents drafted in the last 10 years, your attorney should be able to send an electronic copy. If not, simply bring your documents to your adviser. If your documents are more than 15 years old, chances are we will recommend having new documents drafted, so reviewing old documents isn’t critical.
Budget: We can sense your discomfort with the mere mention of the word ‘budget.’ To best gauge your general spending levels, simply take a few months of credit card statements and bank statements to understand an average of your monthly spending patterns. It’s that simple. If there is a need to dig deeper into your budget to identify specific spending patterns, we can do that together at a later time.
Passwords: Assemble login credentials to any and all financial accounts in one location. This will aid the financial planning process, both now and in the future. If you haven’t done this yet, you’re overdue to organize this aspect of your life so bite the bullet and get it done.
Once your adviser has all of your information, they will do the heavy lifting of organizing it, entering it into their financial planning system, and deciphering the details. This is the toughest part of financial planning, but shouldn’t deter you from getting started. The next step of financial planning is the fun part and will make the data assembly all worth it. Once you complete this process, you will likely never have to do it again, so celebrate that accomplishment.
Most people never begin a financial plan because they think they have to have every financial document at their fingertips, read and highlighted with a complete understanding of what it says and how it fits into your plan. This is absolutely not the case. Don’t let the data assembly process deter you from the first step in accomplishing your goals. You’ll have the rest of your life to reap the benefits of your paper scavenger hunt.
Shakespeare makes this process incredibly easy, with both our state of the art financial planning software and our friendly team of advisers. To learn more about this process, give us a call to set up an introductory meeting. You’ll be glad you did.