A comprehensive financial plan involves a detailed look at your current financial situation, a discussion of financial goals and the development of a plan and the financial products to get from here to there. A small business owner should include both personal financial assets and the value of the business in the total plan.
Tax Planning
The tax planning part of your financial plan also coordinates with the other sections of the plan to ensure your financial choices are as tax efficient as possible. You pay personal and business income taxes and must always be aware of estate taxes. Tax planning works to avoid paying too much money to the government and keeping as much of your financial assets for you, your family and your heirs.
Your Assets
The different portions of your financial plan will be integrated with each other and the different parts will include aspects of other sectors of the plan. On the assets pages of your plan are your investments and your retirement savings. Investments could include stocks, bonds, mutual funds and investment real estate. The plan should review whether your current mix of investments is appropriate to meet your long- and short-term goals. On the retirement savings side, the plan reviews the types of plans you have selected, how they are funded and if you have picked the best type of plan for your business.
Passing Along Wealth
The estate plan portion of your financial plan covers how to ensure everything you worked for is passed efficiently to your heirs. This portion of the plan includes information about your investments, life insurance, wills and trusts and the disposition of your business assets. As you increase your wealth and move through the stages of life, the estate planning portion of your financial plan tends to become a strong force in the decision-making process for all parts of the plan.
Your Protection
The protection section of your plan covers the different types of insurance. Property and casualty products like auto and homeowner’s insurance are straightforward. As a business owner, liability insurance protects you and your business against legal actions. Life insurance is important to provide a standard of living to your family, pay estate tax bills or to cover business obligations.
Reaching Your Goals
The purpose of putting together a comprehensive financial plan is to ensure your current and future choices in the financial markets are positive steps toward reaching your financial goals. To coordinate the varied aspects of your financial life, you probably need one financial adviser with the training to develop a comprehensive financial plan. This adviser will work and coordinate with the other professionals who handle parts of your finances such as insurance agents, investment advisers and lawyers.
A comprehensive financial plan involves:
- A discussion and understanding of your long term, financial goals
- A thorough review of your current financial situation.
- The development of a plan including all financial products needed to take you from where you are today to where you need to be in the future.
A solid financial strategy includes, among other topics specific to your life situation and goals:
- College planning
- Retirement planning
- Tax management
- Risk management
- Debt structure
- Estate management
- Insurance
- Complex life issues. This includes your family structure, such as taking care of aging parents now, or perhaps sooner than you expected to.
Financial Blood Test Report
In accounting, a financial condition report (FCR) is a report on the solvency condition of an insurance company that takes into account both the current financial status, as reflected in the balance sheet, and an assessment of the ability of the company to survive future risk scenarios. Risk assessment in an FCR involves dynamic solvency testing, a type of dynamic financial analysis that simulates management response to risk scenarios, to test whether a company could remain solvent in the face of deteriorating economic conditions or major disasters. Dynamic solvency testing may involve both deterministic projections, based on known risks, and stochastic projections that include random risk events.
The Financial Blood Test framework makes it easier for planners to render the service; and easier for investors to understand the report and resulting strategy. It can be offered by any planner in a financially viable format. Employees in banks can offer the service to a large number of clients. It is also possible for remote branches (which might suffer from weaker skill sets) to offer financial planning in the hinterland of the country.
Thus, financial planning can become a mass service so critical, when the population mass has the money, but lacks the financial literacy.
Independent Financial Advisers often complain that they are not being paid for their financial planning service. They need to decide
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