Financial Planning Exposed

For the record, I did not photograph these retirees.

Real FINANCIAL PLANNING dives much deeper than investment management. A formal financial plan covers insurance, taxes, estate planning, cash planning, and retirement planning. In order to get totally organized, you'll have to analyze a lot of numbers. Laying out your entire financial situation can trigger emotions we prefer to avoid. Seeing your personal savings, debt, or insurance recommendations in one place can be scary- however, the worse tactic is to bury your head in the sand.

Earlier this week a client confessed to me they were uncomfortable with the amount of debt they had. They compared it to being "naked". They also commented I was the only other person that knew their entire financial picture. We chatted about feeling exposed.

I did my best to first take the route of empathy. I told the client I've made almost every financial mistake. More than once I've felt sheepish admitting failures to my wife, parents, and in-laws. I believe sharing some of my personal situation with clients lends credence to idea that I experience most of the same challenges as everyone else. For example, I SUFFER THE SAME WAY as clients when markets decline.

The second thing I did was go back to the financial plan. This is where the logical argument arises. While I agreed with the client their debt compared to income and assets was higher than it should be, it's not sabotaging the retirement goal. In my analysis, I looked beyond the debt at future sources of pension income, retirement plans, and home equity from multiple properties. The reality is for this client, they have more going for them than against them. The numbers support this position.

Committing to a financial plan may yield uncomfortable surprises. It's not fun adjusting your lifestyle to save more- or maybe retiring a year later. It's can be especially hard when you share your financial life with a stranger. I can only imagine it's like when my doctor asks me to drop my pants each year during my physical. All you can do is surrender in battle, and hope it's over quickly.

The best way to work through these emotions is to recognize some financial discomfort now equates to a wealth of financial comfort down the road. More often than not, simply talking about your situation helps you feel better about it. Even better, you're usually in better shape than you think you are!