Financial Planning Gilbert, AZ

investor analyzing finance estimation charts, financial analytics, business man working on investment plan in officeMost of us have similar goals in life: Financial security, to be able to provide for yourself and your loved ones, to send your kids to college, to retire when you want and how you want, and to care for your elderly parents if ever necessary. Of course, we all have personal goals as well, such as starting a business or leaving a legacy to our heirs. Whatever life you envision for yourself, most of all, we all want to live a full life without needing to worry about if we’ll have enough money for tomorrow.

Financial planning is the process by which you create an actionable plan to achieve these goals and any others you have. Much as you would map out a road trip across the country in advance to make sure you hit all the stops you want to see along the way without running out of gas in the middle of nowhere, financial planning helps ensure you reach all of your financial goals without running out of money along the way.

If this sounds like a big task, it can be. That’s why financial planning incorporates many different elements, such as retirement planning and investment management. Each of these areas work in conjunction to help you navigate the twists and turns on your life’s road trip. Let’s look at each of these elements and how they come together to create a financial plan.

Chapter 1

What Financial Planning Used to Be

Initially, financial planning was reserved for the affluent. Only the very high net worth or those with complex financial situations and goals needed to bother creating a financial plan for their lives. 

When financial planning started to reach the masses, it was largely product-driven. Brokers would cold call customers to sell them products or real estate partnerships. Gradually, interest in the stock market began to arise. As 401(k)s began taking the place of pensions, forcing workers to take charge of their own retirement, the desire for financial planning spread to all wealth and income brackets.

Chapter 2

What Financial Planning is Now

Today, financial planning has evolved into a holistic, goals- or needs-based practice. Instead of focusing on just one aspect of your life, such as if you’ll have enough to retire, financial planning looks at all the aspects of your life from here until retirement and beyond. A comprehensive financial plan should address all of your financial goals and helps you pull together all of your financial resources – from retirement and investment accounts to real assets like your home or business – so it can work in conjunction to help you meet those goals.

A financial plan can help you gain clarity into where you stand today relative to where you want to be in the future. It should walk you through the steps necessary to get from here to there and alert you of any speed bumps you may encounter along the way. With the evolution of financial planning software, we can now run extensive simulation tests to see how different economic or financial scenarios will impact your outcome.

In short, financial planning is creating a financial roadmap for your life. It’s there to help you navigate from rest stop to rest stop while making sure you don’t miss any of the scenic overlooks along the way.

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Chapter 3

Retirement Planning

Retirement planning is a segment of financial planning that focuses on what is, for most people, the biggest financial goal of all: Retirement. 

Retirement planning begins with identifying and quantifying your retirement goals. It looks at what those goals will cost in the future, then helps you determine the necessary steps given your income and resources to reach them.

One of the biggest challenges for retirement investors is how to transition from the accumulation stage to income distribution come retirement. Throughout your working years, you’re accumulating assets by saving and investing your income. Once you reach retirement, you need to turn these assets into an income stream that can provide for you in your non-working years. Unfortunately, this is not as simple as flipping a switch.

Another key aspect of retirement planning is scenario testing. A lot can happen between today and the day you retire. From bear markets to recessions, pandemics to personal catastrophic events, there are many “what ifs” to prepare for where retirement planning is concerned. Running different scenarios can help you ensure you don’t run out of money in retirement, no matter what the future may bring.

Retirement planning also includes Social Security and long-term care planning. A financial advisor can help you strategize the best time to take Social Security and how to cover the costs of long-term care, which can be bankrupting in retirement if you aren’t careful. 

Ideally, retirement planning is an ongoing process throughout your life. It should begin as soon as you start working and continue until well past the day you retire. Many people live for upwards of 30 years in retirement, so continuing to track and monitor your financial situation along the way is crucial.

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Chapter 4

Investment Management

Within both financial planning and retirement planning there is investment management. Each of these elements work together to help you achieve your financial goals.

Just as retirement planning focuses on the retirement aspect of financial planning, investment management focuses on the actual investments you use in your financial plan. It includes not only the buying and selling of investments, but also how you manage the investments you own. For instance, a financial advisor should help you minimize taxes on your investments by strategizing where you hold them. A financial advisor can also help you create a plan for how you’ll acquire and sell your various assets throughout your life.

Financial advisors can help you select the right investments for your specific financial goals. This can include determining the right asset allocation, investment selection and portfolio strategy for your life situation.

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Chapter 5

Concentrated Stock Options

A particular challenge for many investors seeking financial planning help in Gilbert, Arizona is dealing with concentrated stock options. It’s easy to end up with a concentrated stock position. Maybe you inherited shares from a loved one or have employer stock options that you’ve never exercised. You could even end up with a concentrated position simply from holding shares for too long without rebalancing. If the market price of your shares rises, its weight in your portfolio will too.

Having too much of your portfolio in one stock can overexpose you to specific risk. If the company you’re investing in were to go bankrupt or fall out of favor in the market, you risk losing a significant portion of your portfolio. For this reason, it’s important to unwind concentrated positions before they become detrimental to your financial goals. A financial plan can help you find the best way to unwind these positions or exercise your options.

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Chapter 6

The Fiduciary Standard

Life loves to throw curveballs – and often when we least expect it. We’ve all seen this firsthand with the COVID-19 pandemic. Given all the complexities of financial planning (for Gilbert, Arizona residents and anywhere else in the world), working with a financial advisor is important. A good advisor should be able to help you build a holistic financial plan that ensures your retirement planning and investment management needs are taken care of. But not all advisors are held to the same standard.

The fiduciary standard is the highest level of care in the financial industry. Created by the Investment Advisors Act of 1940 and regulated by the Securities and Exchange Commission (SEC), the fiduciary standard governs Registered Investment Advisors (RIAs). A fiduciary financial advisor is required to put the client’s best interests before his or her own at all times. A fiduciary financial advisor can only recommend the best option for clients, even if doing so is not in his or her own best interest.

Fiduciary financial advisors must also disclose any conflicts of interest or potential conflicts of interest, so you can rest assured they aren’t going against your best interest.

Advisors who are not held to the fiduciary standard only need to provide recommendations that are suitable to their clients. They can suggest a product or solution even if there is a better option available. For instance, under the suitability standard, an advisor can recommend a higher cost product provided the fees are still “reasonable.”

When choosing a financial advisor to work with, look for someone who works under the fiduciary standard so you can know you and your financial future are in the best hands.

Watts Gwilliam & Company is a fee-only, fiduciary financial advisory firm headquartered in Gilbert, Arizona and serving investors nationwide. Learn more about what this looks like and how we can help you create a financial plan that’s right for you. 

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