1. Financial Planning Financial Planning An Introduction to the Financial Planning Process An Introduction to the Financial Planning Process Presented by: Lawrence W. Wiswall Jr., CFP®

2. Financial Planning What is Financial Planning What is Financial Planning Role that Financial Planning plays Role that Financial Planning plays Key Area’s of Financial Planning Key Area’s of Financial Planning Who do I need / Can I do it myself? Who do I need / Can I do it myself? The Process The Process

3. What is Financial Planning? Personal Financial planning is the process of meeting your life goals through a “big picture” approach to managing your finances. Personal Financial planning is the process of meeting your life goals through a “big picture” approach to managing your finances. Financial Planning is a PROCESS not a Product Financial Planning is a PROCESS not a Product

4. Financial Planning’s Role Define both short and long term goals Define both short and long term goals Assess your current situation and commitments Assess your current situation and commitments Identify realistic strategies Identify realistic strategies Put plan into action Put plan into action Monitor Progress Monitor Progress

5. Key Areas of Financial Planning Income Tax Planning Insurance Planning Retirement Planning Estate Planning Cash Management Education Planning Investment Planning

6. Cash Management The establishment of budgetary controls over expenditures Scheduling of major cash commitments for future years Elimination of negative monthly cash flow & expansion of daily standard of living The evaluation of current debt levels

7. Investment Planning Bonds Income Producing (REIT’s, Utilities, Pipelines) Mutual Funds Equities (Stocks) Asset Allocation Investment Strategies Taxation and Tax Efficient Investments Risk vs. Return Types of Investment Vehicles

8. Income Tax Planning Tax Management Techniques Deductions Other Tax Info Tax Calculations for Individuals Income Tax on Trusts and Estates

9. Education Planning Projecting costs & methods of paying for schooling Developing plan to accumulate the funds needed Utilizing tax advantaged strategies Determine additional ways to make up any shortfalls, student loans etc.

10. Insurance Planning A form of risk management Why risk Management?

11. Liquidity Crisis – forced sale of assets at sacrificed prices Death - Loss of family earnings Disability – Loss or reduction of family earnings Sickness – Unlimited medical expense, Loss of earnings Property Loss (Theft, Fire, etc.) - loss of assets Personal Liability Case – Legal expense & possible court judgments For life’s unexpected events

12. Insurance Planning A form of risk management Types of Insurance Auto Home Health Long Term Care (LTC) Life Insurance Disability Insurance Why risk Management?

13. Retirement Planning Forecast income requirements during retirement years Determine extent to which net worth can support these requirements Learn benefits & limits of available resources provided by social security Determine sources for preparing, IRA’s qualified retirement plans, annuities, etc.

14. Estate Planning Business & Property Transfers Marital and Charitable deduction vehicles Federal Estate Tax liability calculation Documents of Transfer – Wills & Trusts Gifts and federal gift taxation

15. 6 Steps of the Planning Process Assets – Liabilities = Net Worth Determine type of assets held III. Set Objectives IV. Practice Risk Management V. Establish a model (Allocation) II. Know what you can afford to invest I. Learn what your net worth is: VI. Find assistance if needed

16. I. Determining your Net Worth Need to determine your current status and where you are by accessing what you own and what you owe (assets & liabilities) Shows your position, a personal balance sheet Needs to be updated at least on a yearly basis

17. II. Know what you can afford to invest 1 st Month - Develop your spending pattern 2 nd Month - Realign spending to match savings & investment goals 3 rd Month - Make sure revised spending habits are working Build cash reserve for emergencies of 3 to 6 months of after tax income Once cash reserve met, begin funding for goals Establish a three month process

18. III. Set your Objectives  Child’s education, Purchase a new home, Retirement Goal should consist of:  Timeframe in which to acquire fund  Funds needed to accomplish goal  What you want to accomplish Set savings plan to accomplish goal Determine investment goals both short and long term:

19. IV. Practice Risk Management “ Don’t risk more than you can afford to lose. But, don’t pay to insure what you can afford to risk” Professor Robert Mehr, Principles of Insurance 2. Increase deductibles for risk you can afford to self insure 1. Reduce or avoid obvious hazards- seatbelts, smoke detectors, personal health etc. 3. Make sure you are insured for Health, Life, Disability, LTC, Auto, Home and Excess Liability (Umbrella) Policies where needed Good Financial management protects from perils that can drain your assets

20. V. Establish a model (Asset Allocation) Goals and time frame to accomplish them Risk vs. Reward Tolerance Age / Family situation Your present situation Allocation then allocated to items determined by their risk Allocation is a personal preference that is based on:

21. Can I do it myself Yes anyone can plan for their financial future Question to ask yourself is not CAN but SHOULD you: Do I have the knowledge of products and am I comfortable choosing them? Do I have the time to organize & track them? Do I have the discipline Do I want to do it alone?

22. VI. Find Assistance Legal Assistance Legal Assistance Accounting / Banking Assistance Accounting / Banking Assistance Financial Planning Assistance Financial Planning Assistance Broker Assistance Broker Assistance If needed find an expert in the appropriate area for assistance Get additional information through books, seminars, or further education

23. Questions