Why Your Starting Point Matters to Your FinancialPlan

When beginning the process of a financial plan with your advisory team, understanding your current financial position is a crucial first step. If your financial plan is a road map that will help you achieve your goals, knowing your point of departure, or starting point, is just as important as knowing where you’d like to end up. Having insight into your cash flow—your money in and money out—is a very powerful tool and will provide a foundation to start diving into deeper financial planning topics, such as investments, insurance, retirement, and taxes.

To kick off the financial planning process, your advisory team will send you two documents to fill out:

1. Net worth statement  

2.Document request and budget worksheet  

Your net worth statement shows us the structure of your financial situation: your assets and liabilities as well as anything that might impact your net worth in the future. This framework is important as it allows us to see where we need to dive deeper. Our deeper dive comes in the form of the document request and budget worksheet. The budget section tracks all of your expenses, separating everything so we can get an accurate picture of your money out as well as the expenses with different timelines and tax implications. Providing us with a general ballpark expense number rather than a breakdown affects the accuracy of our projections and may mean that you end up at a totally different destination(you know, those shortcuts on the road that don’t actually turn out to be short cuts after all).

You’ll also notice we request copies of all your relevant statements, such as investment and bank statements, mortgage statements, paystubs, pension plan statements, and Social Security statements. When we have copies of these documents, it allows us to use our financial planning knowledge to go beyond the basic facts and truly assess how your financial information works together. Think of each of these statements as a different color, and the more “colors” we can use to paint the picture of your cash flow, the more vivid and true-to-life your plan will be and the more likely you’ll arrive at your desired destination.