Write a Love Letter

by Mary Evans

As a Certified Financial Planner™, I’m often asked what I actually do for my clients. Up until recently my answer was a bit long and cumbersome. Then one day after speaking with a few of my clients, it dawned on me that what I really do is help clients write love letters. Let me show you two very different examples of these love letters.

Dear Kids,

I know how heartbroken you are over the passing of your Dad, as am I. He was a wonderful man and we’ll always miss him. I also know how worried you are about me.
You don’t have to worry about me. Your Dad and I, although hoping this would never happen, have planned for this. I can keep the house as long as I would like and will have no problem paying my bills. What I need from you is your love, affection and the ability to spoil my grandkids.

All my love,

OR, the second paragraph, could sound like this:

I just don’t know what I’m going to do. Your dad and I never took the time to plan for this. I’m sure I’ll have to sell the house and I don’t think I have enough to pay all my bills. It’s with such great sadness, that I’m going to have to ask you for help.  I’m so sorry.  I never thought it would come to this.

All my love,

A good Certified Financial Planner™ helps people write the first letter, so they never have to write the second ending. Some good things a comprehensive plan should answer are:

  • Is there a comprehensive list of questions that focus on your long term and short term goals?
  • Does the plan involve a list of scenarios, including such things as an early death or disability? A Job layoff?
  • Does the investment performance use a Monte Carlo simulation and not just an average return?
  • Does it include scenarios for potential road blocks, such as increased/decreased inflation, changes to social security, pensions and other retiree benefits?
  • Does it include the impact of rising medical expenses and long term care?
  • Does it lay out your cash flow year by year until you end retirement?
  • Is it being updated at least once a year and also when there are any major changes in your life?

This is just a small sampling of the questions your plan should be answering.

Although a good comprehensive plan will analyze if you’re holding the appropriate investment to meet your goals, it is not the beginning. The plan should be first and the investments second. Then your planner will make sure that your investments are designed to help reach your goals.

The burden for retirement has shifted from the employer, the union and the government to the employee. When pensions, social security and retiree health care handled most of a retiree’s expenses, financial planning wasn’t as important as it today. Putting all of the emphasis on the investments is like building a house without any architectural plans. So find yourself a good CFP who focuses on building a custom plan first.

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