Having a proper plan makes everything easier and increases the likelihood of success.
~ Frank Wiginton
Frank Wiginton has written an e-book called Financial Planning: Helping You Sail Successfully into the Future. He recently asked for my comments on the book and I thought you might be interested in the e-book as well, so I’ll offer a quick review here. You can download the PDF for free by clicking on the title or the image to the left. (For the record, I don’t have a formal business relationship with Frank, nor am I receiving any compensation for writing this review. I just found the e-book interesting and I thought you might too.)
Frank is a personal finance speaker, educator, coach, and a Certified Financial Planner with TriDelta Financial. You may recognize his name from media appearances on Business News Network (BNN), Citytv, Global TV, CBC Radio and many others. He is a Certified Financial Planner (CFP), Financial Management Advisor (FMA), Canadian Investment Manager (CIM), and a Fellow of the Canadian Securities Institute (FCSI). He also wrote a guest post on how to Get Your Inheritance Early here at Balance Junkie this summer.
Frank is a fee for advice planner as opposed to the type of financial planner you may be accustomed to. Most planners are basically salespeople, and often neglect the big financial picture in order to sell you mutual funds or insurance products. The inherent conflict of interest in that model is the subject of great debate, as is the very concept of what a financial planner is and what types of services he/she should provide.
What is a Financial Plan?
The first section of the e-book deals with what a financial is, and perhaps more importantly, what it is not. Here are a few examples of what a financial plan is not:
- A two-page document you get after spending 15 minutes with someone at the bank
- A report you get after spending an hour or two with an investment advisor at a brokerage firm and answering a two-page questionnaire to determine your “risk profile” regarding the allocation of your investments into different types of investments.
- Dealing with an advisor whose only solution is to offer you investments in mutual funds and GICs, promising you big returns
Here are a few examples of how a comprehensive financial plan should help you:
- Identify and understand what you spend your money on
- Understand, organize, and structure debts efficiently
- Understand what your money is invested in
- Set goals that are specific, measurable, attainable, realistic, and time limited
If you’re like me, you may have thought of a financial plan in the terms outlined under what a financial plan is not. When I think of a formal financial plan prepared by a professional, I think about those risk tolerance questionnaires or maybe a meeting with an insurance agent, broker, or bank representative in which I receive a sales pitch for their products. Not all planners work that way, and it’s important to know what type you’re dealing with before you commit to working with anyone.
Why Do You Need a Comprehensive Financial Plan?
Frank offers some interesting research information in the e-book. According to the Financial Planning Standards Council (FPSC), a comprehensive, integrated financial plan is where “one’s main financial advisor has provided financial planning for major life goals and events, or at least three of the following planning components: household budgeting, tax, retirement, estate planning, investing, debt or risk management.” A recent study showed that people with a plan like this were:
- more optimistic about their personal well-being
- felt better prepared to deal with financial emergencies or tough economic times
- more confident about reaching a wide spectrum of life goals
While the positive effects of having a formal, written, comprehensive financial plan seem obvious, it’s amazing how many of us neglect to construct one, either on our own, or with the help of a professional. In spite of my relatively careful attention to our financial situation, I’m afraid I’m in that group too.
How to Set Up a Proper Financial Plan
The e-book finishes up with a step-by-step look at what’s really involved in setting up a comprehensive financial plan with a professional planner like Frank Wiginton. As you might expect, his approach involves extensive data gathering and assessment, along with a carefully constructed financial plan that includes tax planning as well as investment ideas. Once the plan is formulated, you need to review it to make sure you’re completely comfortable with it. After that, the plan will need to be reviewed regularly to make sure it’s still consistent with your goals and personal situation.
There’s a lot more information in the e-book than I can outline here. But it’s a quick, informative read and I think that you’ll find some interesting food for thought. I like to think that our finances are pretty well-organized, and that provides me with some peace of mind. But the truth is that we don’t have a comprehensive, written plan that covers budgeting, taxes, debt, investments, and estate planning all in one place. This e-book made me wonder whether I could be doing more to organize and plan our financial future, and whether or not it might be wise to get some professional help to do so at some point.
How do you handle financial planning?