Financial planning at its very core is incredibly private. We understand that dynamic very well. We ask you to provide a lot of information regarding your personal finances, goals, beliefs and values, and your family.
Sometimes we run into resistance receiving the information we ask for, so we thought it wise to explain why we ask for items like Social Security information, a budget, or statements.
Being your financial planners, we take on the responsibility of providing you with advice, coaching, and guidance tailored to your unique situation. No two of our clients are the same – each person we work with is completely different. To provide advice to help you achieve your goals and protect you along the way, we need very clear, accurate, and concise information.
We consider it unethical to give you advice without knowing your total picture. We consider it unethical for any advisor to give you recommendations and advice without knowing the same. It is something we take very seriously here at TenBridge and strongly feel our peers should as well.
We recognize some pieces of information can be harder to gather than others, but it is still important for us to have. Below are some common items which tend to be more of a struggle to gather, so we are breaking them down with specific reasons why these items are important.
Social Security Statements
There are several items of consideration when it comes to your social security statements and having the actual statement is incredibly important to your financial plan.
- Your social security statements allow us to compare your tax returns (another item we ask for) to your earnings history. This allows us to ensure your earnings history is reported correctly and your benefits are calculated correctly.
- We use your earnings history to inform the financial planning software how to accurately predict your benefit when you retire.
- The statement tells us how much you would receive in disability benefits if you became disabled, or the amount your survivors would receive if you passed away.
- Lastly, your benefits change year to year based on the credits you earn, your income, and the current inflationary environment.
Budget
Your current and retirement budgets can be some of the hardest items to produce. They also provide some of the most impactful information for your financial plan.
Without good numbers, everything else is just a guess. Having real numbers based upon your individual spending habits enables us to design your goals around your unique needs, wants, and wishes.
The budget tells us what you are spending now and what you will need later when you reach retirement. It also helps us tailor our advice to your unique situation. Why advise someone to pay down their mortgage if they cannot afford to? On the flipside, what is the best way to deploy someone’s cash flow surplus?
Sometimes we receive budgets with numbers that are a “guesstimate”. Giving us a budget that is only a guess means the outcome of your financial plan is only a guess as well.
What are “good” numbers? Ideally, good numbers reflect your average expenses throughout the entire year. This is where tracking your budget on a consistent basis or using budgeting software comes in handy.
Statements
Whether it is a statement for your loans, investment, or retirement account, checking or savings account, or insurance policy, statements provide us a lot of important information. It can also be the easiest way for us to collect all the nitty-gritty details.
With investment, retirement, checking, and savings statements, we can see:
- What types of accounts you have and the values in these accounts to enter properly into the financial plan.
- How much your employer is matching to your retirement account and add it to your financial plan.
- How your money is invested and if these investments are in alignment with your financial plan.
- How accounts are titled and who the beneficiaries are for estate planning purposes.
- If you have enough in emergency savings, and how your savings fluctuate year to year. Checking and savings are a barometer of health for our clients, especially our retirees. If these accounts fluctuate widely for no apparent reason, it is an indicator to take a closer look.
With loan statements, we can identify:
- The details of the loan, such as the balance, interest rate, and principal and interest payments to be added to the financial plan.
- If you are making additional payments to the principal and if it will be paid off sooner than expected, which can have an impact on your cash flows before and during retirement.
With life, long-term care, and disability insurance policies we see:
- What type of policy it is, the premiums you pay, the benefits it provides and how they change, your beneficiaries, and more. We add this information to your financial plan, but it also aids in estate planning, insurance needs analyses, and more depending on what type of policy it is.
We also use these statements to compare with your current budget and make sure the information is reflected accurately.
We recognize how vulnerable it can feel to share this information with us. It takes courage and effort, and we respect you incredibly for it.
Although it can be uncomfortable at times, our hope is you understand why we ask. More than anything, it is to ensure we are providing you with the best guidance possible to help you reach your goals.
Sirra Anderson-Crum FPQP™
Paraplanner