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January 21, 2020

Oakland, CA | Best Financial Advisors East Bay Use a Financial Planning Process for Success

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Using the Financial Planning Process to Prepare for Retirement:

The financial planning process can play a key role in making future financial decisions.

A couple recently came to our firm to gain a second opinion on their financial well-being. They wanted to assess how different scenarios would impact their overall financial condition.  The clients were 58 and 54 years old and approaching retirement.  They were looking for guidance regarding their retirement expenses and wanted to feel more comfortable about their future.

After an initial meeting and subsequent data gathering phase, a thorough analysis and review was prepared.  We act as fiduciaries for our clients and have each client go through the six steps of the financial planning process before making any recommendations or providing guidance.

The financial planning process contains the following steps:

  1. Establishing and defining the client relationship
  2. Gathering data and developing financial goals and objectives
  3. Analyzing and evaluating your financial situation
  4. Providing and reviewing recommendations
  5. Implementing the recommendations
  6. Monitoring progress

This process is critical for being able to provide the type of guidance that is in the client’s best interest.  For the client mentioned above, we met and presented a comprehensive financial plan that captured a snapshot of their current financial condition and included specific action items that addressed their financial goals and objectives.  We then were able to add additional scenarios to their model to assess the overall impact to their financial plan.

One example was that they wanted to understand the impact of selling their home at different price points and potentially renting for a time period before buying their permanent retirement home.  We ran through different options and shared a dollar amount difference for total assets and net worth at end-of-life depending on which scenario we chose to model.

We were also able to show our clients the overall financial impact associated with taking Social Security early at age 62, waiting until their full retirement age (FRA) or delaying until age 70 to get the maximum amount.  Many factors come into play when evaluating this opportunity.  Depending on the availability of other sources of income, it may make sense to allow investments to stay invested and continue to compound over time and use Social Security income earlier to help cover expenses.  One interesting take away is that there is always a break-even point which makes the most financial sense.

We were able to provide key information regarding the reimbursement of college expenses.  Our clients had a large balance left in their children’s 529 funds.  They paid for a portion of the expenses with non-529 funds and they also had a child who received a scholarship.  We provided advice on how to access their existing 529 funds in these situations.  The result would allow them to make qualified withdrawals from their 529 funds without paying any additional taxes.

If you are looking for financial guidance, whether it be for a one-time financial plan or continuing advice on your investments, we invite you meet with the First and Main Financial advisors for a free consultation.  We would be more than happy to sit down with you, assess your current financial situation and review with you our services to help you navigate your own financial future.

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