How do you plan to secure your financial future? Build wealth? Limit your tax exposure? Unless you’re a Certified Financial Planner™ yourself, you’ll probably need to seek the assistance of a professional. But how do you know you’re choosing the right one?
Your immediate conclusion might be to call up an investment advisor. After all, managing your assets is what they do, right? Well, yes, but that might be the extent of it. More often than not, wealth building requires much more than the right investment choices. In fact, investment management is only a fraction of the picture.
Comprehensive Planning vs. Investment Management
On the surface (and to the detriment of many consumers), investment management and financial planning look quite similar. They are both financial services that help you to plan and manage your assets while navigating the volatile stock market.
But the reality is that building true and lasting wealth—the kind that supports your ideal lifestyle in retirement and is then passed down to your heirs—requires more than just a selection of high-performing investments. It requires the ongoing monitoring and adjusting of multiple areas of your life.
Three Cogs in the Comprehensive Financial Planning Machine
Operating the financial planning machine requires a thorough, comprehensive, and multi-disciplinary approach: one that simultaneously tackles (1) investment management, (2) financial planning, and (3) tax planning and distribution optimization. Because each focus area affects and is affected by the others, each must be appropriately accounted for at all times.
These three areas of comprehensive financial planning are interconnected and mutually influential. Imagine them as cogs in a machine –the machine of maximizing your wealth. When they’re all working together, the machine moves forward, and you, the client, are propelled closer to your overall financial goals. If one or more areas is neglected, progress is slowed.
The eleven-year bull market we have been experiencing combined with the swift market recovery after last year’s drop may have investors looking at the discipline of investment management through rose-colored glasses. Buying low-cost or passive funds must be simple. After all, everyone has been earning high returns for so long. What more could an investor need?
But, things get trickier when we hit a bear market. Diversification, re-balancing, and decreasing concentration risk become timely and vital to the strength of your portfolio. But how much risk is too much risk for your financial plan? How will the moves you make within your portfolio affect your tax liability? Investment choices should align with your financial goals and avoid inducing a major tax event.
When investors focus only on investment management, they miss out on the benefits of a comprehensive financial plan—benefits that directly affect the longevity of their portfolio and their sustained quality of life. Focusing only on investment management can compromise your financial well-being by allowing the other two areas to put a drag on successful outcomes.
Financial planning is the most personal cog in this machine. It is the area that seeks to improve your financial situation while creating a vision for a strong, healthy fiscal future.
At URS, it begins with gathering a thorough client profile, helping the client identify their life goals, then evaluating current assets and liabilities to put a plan in place that helps them reach those goals.
When life changes, the financial plan changes, too. We continuously monitor and update our clients’ plan when any major or minor event occurs such as marriage, divorce, the birth of a child or grandchild, the sale of a business, the purchase of a home, and much more. Because more often than not, financial goals or circumstances change with these events, as well. The goal is to keep you on track to get where you want to go no matter what life throws your way.
Due to the personal nature of this focus area, we often build deep and trusting relationships with the individuals, families, and couples we serve. Not only do we get to know them, we become personally invested in seeing them succeed.
Tax Planning and Distribution Optimization
Studies show that taxes are the second highest concern in retirement after the question, “Will I run out of money?” Think of investment management and financial planning as playing good offense and tax management as playing good defense. That’s why your plan must consider taxes. You can score all the points you want, but if you’re letting the opposition score on you as well, your odds of winning decrease substantially.
Reviewing the tax return, building an effective, proactive strategy (that can inform investment decisions), and distribution optimization for retirement tax planning are critical elements of this focus area. To piggyback off our sports analogy: you can earn all the money you want, but if you don’t have a strategy for keeping it, you could end up with a lot less than you anticipated.
Keep the Machine Running Smoothly
To keep things running smoothly and swiftly in the direction of your goals, you’ll need to take a multi-disciplinary approach with your wealth. Never stay so hyper focused on one area that you neglect the others. We know this can get tough. In fact, it’s a full-time job—our full-time job.
At URS Advisory, we know that numbers are only a small part of your bigger picture. Your values, priorities, and life goals are what really matter. The numbers just help you get there. That’s why we pay close attention to each of these main focus areas so that we may give our clients the comprehensive plans they want and need.
If you’re interested in learning more about our comprehensive planning services at URS Advisory, we would love to chat. We are located in Stuart and West Palm Beach, Florida, but serve clients virtually all over Florida. We encourage you to schedule a call with us today so we can learn more about you and where you’d like your wealth to take you.
Disclaimer: Advisory services are offered through URS Advisory LLC, a Registered Investment Advisor in the State of Florida. Insurance products and services are offered through URS Insurance, an affiliated company. URS Advisory LLC and URS Insurance are not affiliated with or endorsed by the Social Security Administration or any government agency. Investing involves risk including the potential for loss, and past performance is no indication of future results. Opinions expressed herein are solely those of URS Advisory. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your financial adviser or qualified professional before making any financial decisions.