What is a financial plan?

There are 2 basic types of financial plans- Foundational and Comprehensive. Foundational is simpler and usually focuses on one or two client goals. It is similar to holistic financial advice. It can be useful and helpful but only covers so much.

Comprehensive financial advice begins with a deep conversation to fully understand a client’s current situation and exploring strategies to reach their goals. Extensive data gathering about assets & liabilities, income & expenses, financial statements, insurance policies, recent tax return and basic estate documents, are an important start to the process.

A financial plan helps clients see their whole financial picture. It helps clients choose what is most important to them and then a good financial plan will do a simulation where they test the client’s ability to reach their goals. A Monte Carlo simulation is often used to understand the impact of risk and uncertainty in financial planning prediction and forecasting models. Additionally, since many people might be going through life events that are causing them to question how their changes are going to affect them, the plan should be updated annually.

Our financial planning is offered through the Ameriprise Financial Planning Service (AFPS) and is an advisory service for a fee. It is governed by the Investment Advisers Act of 1940, as amended, and allows for ongoing advice and recommendations. Financial advisors can work with clients to track the progress toward stated goals.

A financial plan and personalized financial advice are appropriate for those who want deeper analysis, recommendations, and accountability to address such topics as risk management, education, retirement savings and income, gifting and estate planning strategies, or may have additional considerations including self-employment and other income sources. There are other areas of focus for higher net worth planning clients that analyze wealth building and executive compensation, family wealth transfer for multi-generational & special needs planning, and business planning that might look at business valuation support, exit planning and retirement plan guidance.