Do I have enough money to retire comfortably? That’s the most common question I get asked. And my answer is always the same–let’s go through the financial planning process, put a plan together, and see what the numbers indicate.
In today’s show, we take you behind the curtain and discuss our financial planning process. You’ll learn what goes into a plan, how numbers are calculated, and how they are personalized for each of our clients.
The image of an old couple running out of money and having to rely on government assistance to live out their final years is not something any of us aspire to.
Instead, through your hard work and our collaborative financial planning process, we help people just like you to understand their financial situation and make course corrections along the way.
The goal is to help you make smart decisions with your money and your life so you can enjoy life today and retire with confidence.
As you’ll learn in today’s show, one key to a successful retirement is careful planning along the way. So please read below and listen in as we discuss our financial planning process and how it helps our clients gain confidence and perspective about their future.
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Insights on the Financial Planning Process
1. Don’t be in denial about what could go wrong with your financial plan.
After having done this for several decades, we’ve seen nearly everything that can go wrong with a financial plan. That’s why I think it’s so important to address things that could go wrong, get our arms around them, talk about them, and model them into the plan. We actually look for things that could break the plan and account for them. That way it’s unlikely we’ll ever be surprised by something we hadn’t considered.
2. We start the financial planning process by going through our checklist of important issues.
It’s not just about the asset base or the investments. We start by understanding and helping a client get clarity on a variety of other issues including their family tree, their estate plan, and their tax situation. I believe that if you ask the right questions, you get people thinking about things that they otherwise would not have thought about. Remember that old saying, “You don’t know what you don’t know.” A lot of things get missed because folks don’t even know to think about them. That’s why it’s so important to go through the checklist of important issues so we don’t miss anything.
3. Be concerned if your financial advisor immediately dives into looking at the numbers before getting your “history” and your “story.”
If you’re not working with a Keen Wealth Advisor, pay close attention to the questions your advisor is asking you. If they skim over important information such as your money history and your goals, and instead, jump straight to recommending products, then put your guard up. In this episode, I want listeners to understand the depth of the information that we collect and process before we can even get to the financial plan. In building a financial plan, it’s important to understand the “why” behind what you want to accomplish. This helps us do a better job structuring the plan to meet your goals.
4. The financial planning process is actually very dynamic and interactive.
Once we have a good understanding of what you are trying to accomplish and have collected some data, we fire up our 60-inch monitor and run through a variety of scenarios with you. This is where we shape and personalize the plan by testing assumptions, adjusting goals, and seeing what the results look like. With our interactive planning software, we can adjust the numbers and see the projected impact in real-time. This allows us to develop a financial plan that is personalized to your needs. And by doing this on a regular basis, we can keep your plan current and make adjustments along the way as needed.
5. Reaching a 75% to 90% probability of hitting your goals is what we call the “confidence zone.”
Using our software, we can run thousands of simulations to model projected future outcomes. And based on this modeling, we can calculate what your situation might look like 5, 10, or even 20 or 30 years down the road. Now, this is no guarantee you’ll end up with what the projections show, but the modeling helps guide us in decision-making. We generally try to target a 75% to 90% probability of hitting your goals. If we fall below that range, then we need to talk about making some adjustments in your plan. If you are greater than 90% probability of reaching your goals, then you may be in a position to adjust your goals favorably. Ultimately, we want to keep the plan current, review it on a regular basis, and make adjustments as needed to keep your plan in the confidence zone.
Bill Keen on financial planning…
The first iteration of the financial plan we do for a family is the starting point, not the ending point.
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Got a question or comment? Email it to me and we’ll get back to you or call our office at (913) 624-1841.
Bill Keen is the founder and CEO of Keen Wealth Advisors, an independent Registered Investment Adviser serving affluent clients preparing for retirement and the host of the Keen On Retirement podcast. Bill brings more than 20 years of financial services experience and holds the CHARTERED RETIREMENT PLANNING COUNSELOR designation. Bill created Keen Wealth Advisors to build one of the country’s most personal and trusted wealth and retirement advisory firms.