2 Financial Planning Profession and Industry Overview Financial Planner profession description Industry Changes / Trends Employment / Earnings Job Outlook Education / Training Qualifications / Skill Sets Certifications / Advancement Resources
3 Where are you today? Where do you want to go? How do you get there? What Is Financial Planning?
4 The Planning Process Get organized Analyze and compare financial resources against goals Develop personalized, written analysis Evaluate recommendations and alternatives Put the plan into action (implementation) Keep the plan up-to-date
8 How Are You Going to Achieve Your Goals? Current assets Additional savings and investments Earnings and compound earnings
9 An Illustration of Goal Achievement $100,000 Goal in 20 Years: Monthly Contributions Assuming an 8% return in a tax-deferred vehicle. $175 $264 $422 $752 $1,774 Note: Hypothetical example for illustrative purposes only. Does not represent an investment in any a specific product. This chart does not take into account product Charges, fees or expanses and does not account for inflation. If it did, the monthly contribution amount would need to be increased.
10 What Are the Benefits of Financial Planning? Set your goals and prioritize them Have a plan to help you achieve your goals Learn to have more financial control and to take advantage of investment opportunities Prepare for the unexpected Develop solid financial strategies Get professional direction every step of the way Work toward financial security for your: –Estate (wills, trusts, tax issues, etc.) –Retirement plans –Employee Benefits
11 Getting Yourself Organized Personal statement of net worth Income and expense statement
13 Three Ways to Increase Your Net Worth Save or invest more money Pay down debts Increase asset value through appreciation or reinvestment
14 Income & Expense Statement Income –Salary –Savings and investment earnings –Self-employment –Social Security and pensions Expenses –Housing –Transportation –Food and clothing –Medical and insurance –Discretionary –Personal –Income and employment taxes
15 Income & Expense Statement: Example Monthly Income Wife -$2,900 Husband - 2,900 Interest on Savings - 200 Total -$6,000 Monthly Expenses Food$ 725 Clothing 380 Personal Care 75 Housing1,240 Transportation 400 Discretionary 350 Misc. income and employment taxes 770 Total$4,200 Discretionary cash flow: $1,800 per month
16 $10,000 investment that assumes a 28% tax bracket; does not take any other taxes into consideration. Hypothetical example, for illustrative purposes only. Does not represent an investment in any specific product. *The $14,326 will be taxable at your federal and, if applicable, state rates upon withdrawal. $14,326* Difference! Impact of Taxes: Tax Deferred Vs. Taxable
17 $10,000 @ 3% interest = $10,300 3% inflation - 309 25% Federal tax- 75 ____________________________ $ 9,916 Real return = -.991% *Does not consider any state, local, or other taxes that may be applicable. Real Rate of Return*
18 In Summary Recognize that financial planning is a process, not a product. It can help you to: –Determine where you are today and where you want to be in the future –Get organized with a personal statement of net worth and income and expense statement –Increase your net worth through new savings, paying down debt, and realizing appreciation on your assets –Invest discretionary cash flow systematically for the future –Take into account both inflation and taxes