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Financial Planning Process Can Help Baby Boomers Realize
Retirement Goals
By
Fred K. Bridge CFP®
Much
attention has been paid to the mounting concerns over
the saving and spending habits of Americans. Since July
of 2005, the Department of Commerce has reported a negative
savings rate for American consumers. Studies show that
even as more workers contribute significant pre-tax
dollars to their 401(k) plans, consumer debt is at
an all-time high.
It’s
evident that too many Americans are neglecting long term
financial planning. Like closing the door of a closet
that badly needs organizing, the attitude seems to be
out of sight, out of mind. Concern is particularly real
for members of the baby boom generation.
Already in their mid to late-50s and just 5 to 7 years
away from traditional retirement age, many baby boomers
are facing the undeniable need to re-evaluate their
financial preparedness. Financial planning can help
these individuals meet financial goals and get serious
about retirement planning through the proper management
of their assets.
However, not all financial planners are created equal.
A financial planner who develops a comprehensive and
personalized financial plan will take a holistic view of
an individual’s financial resources, obligations and
goals. The CFP® certification, from Certified
Financial Planner Board of Standards Inc. (CFP Board),
is a good sign a financial adviser can meet your needs.
This certification is awarded to individuals who meet
strict ethical requirements, successfully complete
rigorous education standards, pass a comprehensive
examination and demonstrate their dedication to
providing sound financial advice through experience.
To be
confident that you are receiving financial planning
advice, look for your adviser to follow some or all of
the following steps in creating a plan that’s right for
you:
Establishing and defining the client-planner
relationship.
A
financial planner should clearly explain or document the
services to be provided to you and define both his or
her responsibilities and yours. The planner should
explain compensation fully — how he or she is paid, by
whom, how frequently, etc. You and the planner should
agree on how long the professional relationship should
last and how decisions will be made.
Gathering client data, including goals.
A financial planner should ask for information about
your financial situation and retirement interests. When
working with the planner, you’ll want to work together
to define your personal and financial goals, understand
your timeframe for results and determine your risk
tolerance. Your financial planner should gather all
necessary documents before developing a plan.
Analyzing and evaluating your financial
status.
A financial planner should analyze your information to
determine what you must do to meet your retirement
goals. Depending on what services you need, this could
include analyzing your assets, liabilities and cash
flow, current insurance coverage, investments or tax
strategies.
Developing financial planning
recommendations.
Your financial planner should offer recommendations that
address your goals — whether retirement-focused or
all-encompassing — based on the information you provide.
The key at this step is helping you understand all the
options available, so you’re able to make informed and
sound decisions. The planner should also listen to your
concerns and revise recommendations as appropriate.
Implementing the financial planning
recommendations.
You and the planner should agree on how the
recommendations will be carried out. Your planner might
carry out the recommendations, serve as your “coach” or
coordinate the whole process with you and other
professionals such as attorneys or stockbrokers.
Monitoring the financial planning
recommendations.
You and the planner should agree on who will monitor
your progress toward your goals. If it is the planner
who is in charge of the process, expect that your
planner will periodically review your strategy, report
to you, and adjust the recommendations as needed.
For
America’s baby boomers, it’s time to balance retirement
hopes with the reality of saving. With professional
financial planning help, members of this generation can
immediately maximize the income of their most profitable
years and create a productive financial structure that
will successfully support their retirement goals.
Fred K. Bridge, CFP®, is a financial planner
with Bridge Investment Advisory Service, LLC serving the
greater Denver area. Fred
specializes in fee-only retirement Planning
and investment supervision. This article is based on
copyrighted material provided by CFP Board, a nonprofit,
professional regulatory organization that benefits the
public by fostering professional standards in personal
financial planning. To request a free Financial Planning
Resource Kit, contact CFP Board at 888-CFP-MARK or go to
www.CFP.net
to learn more about financial planning.
CFPTM,
CERTIFIED FINANCIAL PLANNERTM
and
are marks owned by the Certified Financial Planner Board
of Standards, Inc. These marks are awarded to
individuals who successfully complete the CFP Board's
initial and ongoing certification requirements.
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