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Getting Started

Here is what you need to do to move to a comprehensive financial planning process.

By Evan M. Levine, CLU, ChFC

In the May edition of this column, I described the lifestyle benefits that are available to advisors through “comprehensive, goal-based financial planning across a select group of families.” The idea is to do more things for fewer people and ultimately limit your financial practice to only those clients who have bought into your comprehensive plan, both logically and emotionally.

The first step is to create a “comprehensive financial planning process that is better than almost anything else in the market.” If this type of business plan is going to succeed, the advisor must believe his planning process gives the client the best chance of meeting his goals.

Only after goals have been thoughtfully clarified will I deliver my advice.

This is a very subjective concept because “better” and “best” will mean different things to different advisors; therefore, I don’t believe there is one right way to create this process. Depending on the market you are targeting, personal style, background and unique skill set, it may involve the use of a particular financial-planning software program, bits and pieces from different software programs, or your own personally generated Lotus and Excel spreadsheets.

The important thing is that you feel comfortable with the output that is generated and presented and that it gets an important message across to your client in a clear and concise manner. The only way to find out what will work best for you is to try different things (i.e., take action).

I have found that arranging my presentation around the following five major themes provides me with a structure that keeps me on track to ultimately covering all of my clients’ important financial goals:

1. Budget worksheet
In this initial segment, I analyze the client’s personal income and expenses. Income is categorized as earned (salary, bonus, etc.) or unearned (dividends, interest, rental income, etc.). All estimated monthly expenses are labeled appropriately, including tax payments, insurance and other day-to-day expenses as specific as eating out and charitable contributions.

Organizing this information offers me an opportunity to assess whether the client’s current spending patterns are consistent with his core values. Once this exercise is complete, I arrive at a reasonable assumption of how much net income will be available for investments to meet future personal and financial goals. I am then in a position to illustrate what-if scenarios to my clients.

2. College education planning
In this segment, I analyze college education funding options for tuition, room and board, and expenses. Goals and parameters are established including tuition for public or private school, or for undergraduate or graduate school.

After consideration is given to the assumptions that will be used for the inflation factor and investment return, I arrive at various options for current funding strategies. I may also include in this segment a thorough discussion of the different vehicles that can be used for funding and the associated tax benefits, limitations, restrictions, etc.

3. Semi-retirement/retirement planning
This segment typically represents the bulk of the plan. This is where I help the client plan for future financial independence and the ability to achieve his lifestyle goals. Initially, I will spend as much time as needed on goal clarification as the following issues are considered: What is the client’s ideal retirement age? Is it appropriate to consider semi-retirement first followed by full retirement? How much income is needed from all sources to live the ideal lifestyle during semi-retirement or retirement? What other goals are important either before or during semi-retirement or retirement? Only after goals have been thoughtfully clarified will I deliver my advice, which is based on a probability-analysis planning methodology as opposed to one that uses fixed-return assumptions.

4. Insurance analysis
This segment is a complete review of the client’s insurance or risk management considerations. Current policies, including life, disability/medical, long-term care, auto, home and liability coverage, will be analyzed extensively. I will then review the summary of important items, including amounts of coverage, premiums, waiting periods, benefit periods, deductibles, liability limits, etc., and advise the client about the appropriateness of each policy with respect to its current structure and what makes sense within the context of the total package. I offer generic recommendations that can improve the client’s current insurance portfolio.

5. Estate planning
In this final segment, I review estate-planning considerations including wills and trust documents. I will spend enough time on confirming the appropriateness of the current estate plan, including named trustees, executors and guardians. An integral part of this segment is a thorough examination of asset ownership arrangements, beneficiary designations and their consistency with the language in the wills and trust documents. I then recommend suggestions to ensure that the overall estate plan is consistent with the objectives of the total financial plan.

Evan M. Levine, CLU, ChFC, is a financial planner and registered investment advisor with MML Investors Services, Inc. You may reach him at 212-536-6087 or


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