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A Checklist for Your Financial Plan

Sept. 29, 2015
A Checklist for Your Financial Plan
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By Michael Chamberlain, AIF, CFP

Learn more about Michael on NerdWallet’s Ask an Advisor

“What’s in your wallet?” Most everyone has heard the question posed in commercials for Capital One credit cards. It’s pretty catchy, but perhaps an even more important question is this: What’s in your financial plan?

There is no one-size-fits-all answer to this question. Generally speaking, the reason to have a financial plan is to better balance your current needs with your future needs and goals. And everyone has different goals and needs.

Unfortunately, few individuals have a comprehensive financial plan, one that brings together all elements of their financial life. This inability to see the complete picture can lead people to make very costly mistakes. The bottom line is that many folks will fail to achieve the financial life that they want simply because they failed to create and follow a plan to get them there.

What goes into a plan

In general, a financial plan has two halves: what we call “defensive elements” and “offensive elements.” Below is a checklist you can use. Print it out and put a check mark next to each item that would be appropriate to address in your own financial plan.

Defensive elements of a financial plan may include:

  • Understanding where your money goes (also known as cash flow analysis)
  • Maintaining and reviewing estate planning documents (This may include a power of attorney, trusts, a will, a heath care directive, the HIPAA release form and other documents.)
  • Risk mitigation (Do you have appropriate insurance policies that sufficiently protect you from financial loss? And are you overpaying for the coverage?)
  • Getting debt issues under control
  • Tax planning (Are you paying the least income tax possible?)

Offensive elements of a financial plan may include:

  • Home purchase planning
  • Children’s education planning
  • Retirement planning
  • Analysis of your current investment portfolio
  • Assessment of investing risk tolerance
  • Determining ideal asset allocation
  • Creating an investment policy statement
  • Getting specific investment recommendations
  • Stock options planning
  • Charitable giving
  • Legacy planning
  • Other topics specific to your goals and situation

Most people get advice on just a portion of their financial lives. Many individuals have an estate planning attorney, for example, or a tax professional or someone to handle insurance matters or provide investment advice. This advice they get is often incomplete and disjointed, because no one is taking the whole financial picture into account.

As a result, a lot can fall through the cracks. You might overspend on a big house, for instance, not realizing that it could mean your kids will have to borrow money for their education, or that you will have to delay retirement. Your financial goals are interconnected, but often the advice people get is not.

Finding a planner to help

So where do you go to develop a plan that incorporates every element of your financial life? You would be well served by an advisor who has the Certified Financial Planner (CFP) designation. This is reserved for experienced professionals who are trained in all areas of financial planning, have passed a comprehensive test, abide by a code of ethics and complete regular continuing education. To find a CFP professional go to

When choosing an advisor, be aware how he or she gets paid. “Fee-only” advisors charge you for their work on your behalf, based on how much time is involved. What’s important is that your advisor shouldn’t be receiving compensation from any source other than you.

Some people call themselves advisors, but in reality they’re just salespeople. They earn a commission when they sell you a product such as insurance or investments. The problem with this approach is that you never know if the recommendation is in your interests or the salesperson’s.

A hybrid or dually registered advisor can both charge a fee and collect a commission. This makes it very difficult to differentiate unbiased advice from what is essentially a sales pitch.

Many financial planning writers and consumer organizations recommend the “fee-only” approach since it helps reduce the conflicts of interest associated with commissions. The two organizations most often recommended are the Garrett Planning Network and the National Association of Personal Financial Advisors, since members are fee-only advisors.

One of my favorite sayings is “You can have anything you want, but you cannot have everything you want.” You can work toward having abundance, however. Having a comprehensive financial plan can provide you with guidance, give you peace of mind and better enable you to reach your goals. So get to work on your checklist today.

Image via iStock.