At the Halfway Point: NAMB President Glances Back and Looks Forward

At the Halfway Point: NAMB President Glances Back and Looks Forward

January 14, 2003

What financial planning is notDonald F. Hadleyfinancial planning, definition, precautions
Total financial planning is almost always done on a fee basis.
At my company, a few clients that we work with only want insurance
(life, disability and long-term care) or investments (stocks,
bonds, mutual funds, institutional managers and private money
managers). The remainder usually need only products, or do not
understand financial planning.
Financial planning is not:
*Buying life insurance;
*Investing money in a hot stock or investment;
*Getting your taxes done;
*Writing a will or another legal document;
*Setting up an LLC or corporation;
*Calculating how much you need for retirement; or
*Doing an asset allocation.
While all of these items may be important parts of your
financial situation, being concerned only with such things is like
building a house and only worrying about the bathroom fixtures.
There is much more at stake: What else is important? How large a
home you want? Will you want any future construction? What is the
layout of each room? Is there room for a garden? What about a
walk-out second story deck off your bedroom? Where will the sun be
in the morning? Where will it be in the afternoon? Is there room
for a jacuzzi?
Like building a house, financial planning takes thought, time
and energy that can turn a house into a comfortable home.
Financial planning, according to the Financial Planning
Association's Certified Financial Planner Guide is defined as the
process of determining how individuals can meet their goals through
the proper management of financial resources. As a firm, we define
it as, "helping clients, friends and family to build and protect
wealth to accomplish their dreams and to better care for their
important relationships."
Financial planning, however, does involve:
*Holding an annual advisor meeting of your certified financial
planner, certified public accountant, attorney and any of your
closest advisors to do a review of your situation;
*Reviewing the proper business structure to prevent unreasonable
lawsuits, reducing taxes to the lowest possible legal level and
setting the most advantageous basis for selling the business or
passing it to the next generation; and
*Ensuring your income is increasingly less dependent on the ability
of your business to produce income.
As you grow older, the next generation of management and your
competitors may influence your income more than you want them to.
Ask yourself the following questions:
*Do your investment risks match your retirement and independence
objectives? The objective may not be to make as much money as you
can, but solidly and safely grow your wealth.
*Do the financial products you have support the above
*Are the most recent changes in the tax law being utilized by you,
your business and your family?
*Are you protecting your heirs from taxation, the business, each
other, divorce, etc.?
*Do you track where you keep all your records and documents, so
that, in case of an emergency, they will be readily available?
You should prepare to sell your business in the next five to 10
years, and, at the same time, prepare to keep it forever and make
sure that those around you understand your immediate goals, as well
as your lifetime objectives. If the economy in your area has
problems, or your business is badly hurt by outside factors, what
can you do to be prepared?
Ask yourself if you are getting what you, your family and your
business want out of life, and how your financial situation is
helping or hurting that endeavor?
Donald F. Hadley is the president of Fidelity Financial
Group Inc. He can be reached by phone at (800) 786-4332 or by