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What is a Financial Plan?

What is a Financial Plan?

Posted on Apr 27th, 2021

As a Family Office, we often speak about the value of developing a road map – what we call your ‘Financial Plan’ – but what exactly does that mean and why is it important to you and your family?

What is a Financial Plan?

Firstly, a Financial Plan is a comprehensive and vital look at your current financial situation that you create with your advisor. It will outline your current assets, income sources, and goals so that you have a broad understanding of where you are at. It will also shine a light on your investment portfolio so that you can see how and where your assets are being held.

Life changes – and so should your Plan.

Furthermore, a Financial Plan can help you reveal how your income will change your life plans over time. As your life changes, so too will your finances. Whether you start a new career, retire, or inherit wealth from a family member, your financial situation will grow and change. The various sources of income you receive – whether interest, dividends, rental, or capital gains – and how that income is taxed, can have a significant impact on your family’s wealth. A Financial Plan can help determine how to optimize your income stream from a tax perspective. All of these adjustments can be fit into your Financial Plan, in order to address any potential issues that require attention, and help you envision the successful outcome you desire!

Your Trusted Advisor, your guide.

The role of your financial planner in all of this is to help identify all of your goals and aspirations, and then to turn those into numbers to see what fits into your plan and how you can achieve them. They should also take into account potential risks that life can bring and have options to mitigate those risks. These risks could include the loss of your ability to earn income as well as changes in your family situation. Other risks may sit with any assets you own: your home, car, boat, cottage, or travel risk. Having all the information in front of you will make it easier to see how things will unfold in the years to come, as well as giving you the peace of mind that you will be able to achieve your goals. 

So where do we go from here?

Using your Financial Plan, you and your advisory team can play out different scenarios and make educated financial decisions for your future based on how you’d like to see your life – it is critical to understand your options and potential outcomes. Beyond that, it can also help you see how your wealth can positively impact generations to come! Keep in mind, a Financial Plan is a living representation of your financial situation that you can refer back to on a regular basis and adjust as your life changes.

It’s never too early – or too late – to start planning, and once you’ve found the right team to work with who understands your circumstances, you’ll have the confidence to make informed financial decisions that will impact your family for generations. Contact us to work on your Financial Plan today.