A simple definition of Personal Financial Planning is risk control. And a large part of controlling risk is insurance planning. If we’re talking health insurance, the risk is poor health or disease. If we’re talking homeowners’ insurance, your risk is other perils that affect your property. Income protection is done with life insurance and disability insurance.
When we get to the age where we are starting to think about the future (whenever that may be), it is time to think about asset protection and distribution. This is called Estate Planning, and ranges from reasonably simply to horribly complex, depending on our situations. Most people will fall in between.
Asset protection can take many forms:
- Protection from taxation – this includes tax-deferred retirement accounts and annuities, Roth IRAs, etc.
- Protection from paying more in taxes than the law requires
- Protection from creditors – in Florida certain assets such as a homestead and qualified retirement accounts are already protected
- rotection from fraud – many of us use services such as LifeLock to monitor our daily status
- Protection from age-related weakness and intellectual losses – this can involve Powers of Attorney or other surrogate power delegation
- Protection from family members – far too often we see the elderly get fleeced by family members
- Protection from running out of income – annuities and fixed-payment guaranteed payments are there specifically for that purpose
- Protection from unethical salespeople – financial education and literacy, hiring good advisors, and listening to good radio shows will all help
- Protection from estate taxation – good estate planning, using legal means to protect and distribute assets in a manner to minimize taxation, all are the parlance of attorneys
In all these cases, the central focus should be your comprehensive financial planning. It doesn’t have to be a huge, colorful 3-ring binder full of graphs and charts that collects dust on your office shelf. That is a “financial plan,” and they are nearly obsolete in this rapidly-changing financial environment. But financial planning needs to be done on an ongoing basis. This is the primary function of a fee-only Certified Financial Planner. Having a relationship with a CFP means that you meet frequently and discuss a broad range of topics on a continual basis. The CFP acts as a liaison between you, the client, and the other professionals you hire to implement components of your plans. It is important to remember that your advisor should be a fiduciary, which we are, and are very proud to act that way.
Use a qualified CFP and call the radio show every Saturday morning at 10 AM at 904.222.8255!