FINANCIAL PLANNING MYTHS

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FINANCIAL PLANNING MYTHS

• Myths Commonly Associated with Financial
  Planning, the Profession Its Practitioners
• Presented By
• Michael D Puckett, CFP
• CFG Wealth Management Services, Inc.

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TODAYS AGENDA

• Define Financial Planning, The Financial
  Planning Process
• Myths Associated With Financial Planning, The
  Profession Its Practitioners
• What Financial Planning Can Do For You

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FINANCIAL PLANNING DEFINED

• Financial Planning is the process of examining a
  client's personal situation, financial resources,
  financial objectives and financial problems in a
  comprehensive manner, developing an impartial,
  integrated plan to utilize the resources to meet
  objectives and solve problems, taking the steps
  to implement that plan once approved by the
  client, and monitoring the plan performance to
  take corrective action as necessary to assure
  that results match the plan projections." -
  College of Financial Planning

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FINANCIAL PLANNING DEFINED

• Financial Planning is planning for and managing
  lifes financial outcomes

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FINANCIAL PLANNING DEFINED

• Retirement Lifestyles
• Family Related Expenses
• Housing, College, Weddings
• Asset Protection
• Personal Liability, Heath Care
• Elder Care
• Family
• Personal

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FINANCIAL PLANNING DEFINED

• How Do You Define Financial Planning?

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FINANCIAL PLANNING DEFINED

• Financial Planning is planning for, executing
  and managing lifes financial outcomes!

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THE FINANCIAL PLANNING PROCESS

• A formal, six-step process, formulated by the
  College of Financial in 1972, designed to
  address, in whole or in part, lifes financial
  issues and opportunities.

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THE FINANCIAL PLANNING PROCESS

• Step One Establish the Client/Planner
  Engagement You and Your Planner Should
• Discuss your objectives expectations
• Discuss the services available
• Clarify responsibilities and time frame
• Finalize the scope of the engagement
• Determine the fee/compensation arrangement

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THE FINANCIAL PLANNING PROCESS

• Step Two Gather Data Determine Goals Your
  Planner Should
• Obtain information documents
• Help you refine or crystallize goals
• Develop an understanding of your values
  attitudes

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FINANCIAL PLANNING PROCESS

• Step Three Examine Current Financial Condition,
  Problems Opportunities
• Your Planner Should
• Analyze information
• Identify problems opportunities across each
  major financial planning discipline
• Finance Asset Liability Structure, Cash Flows
• Investment Taxation Ordinary and Income
• Risk Management Insurances Asset Protection
• Law Estate, Charitable Legacy Planning

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FINANCIAL PLANNING PROCESS

• Step Four Develop Present Financial Plan
  Your Planner Should
• Prepare present a personalized financial plan
• Establish a review cycle

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FINANCIAL PLANNING PROCESS

• Step Five Implement Your Plan Your Planner
  Should
• Assist the Client or manage the process as
  defined in the Engagement Agreement

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FINANCIAL PLANNING PROCESS

• Step Six Monitor the Financial Plan You and
  your Planner Should
• Review changes in personal circumstances
• Review and evaluate impact of changing tax laws
• Review and Discuss changing life circumstances
• Make periodic adjustments or recommendations as
  necessary

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FINANCIAL PLANNING PROCESS

• Hire Planner and set expectations
• Gather Data and establish personal goals
• Determine and discuss problems and opportunities

• Final document, set policy and action plan
• Implement as required
• Monitor and manage the outcome

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FINANCIAL PLANNING MYTHS

• Myths Commonly Associated with Financial Planning
  Issues, the Profession Its Practitioners

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FINANCIAL PLANNER DEFINED

• Someone who uses the financial planning process
  to help you reach your life plan or
• lifestyle goals.

How Do You Define Financial Planner?
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FINANCIAL PLANNING MYTHS

• Myth 1 All Financial Planners are Certified
  Financial Planners.

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FINANCIAL PLANNING MYTHS

• Registered Financial Advisor
• Registered Financial Planner
• Registered Financial Consultant
• Registered Investment Advisor
• Chartered Financial Consultant, Charter Life
  Underwriter
• Personal Financial Specialist

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FINANCIAL PLANNING ASSOCATIONS SELF REGULATING
ORGANIZATIONS

• Certified Financial Planner Board of Standards,
  Inc. CFP
• Financial Planning Association
• Society of Financial Services Professionals ChFC
• National Association of Personal Financial
  Advisors
• American Institute of Certified Public
  Accountants PFS
• International Association of Registered Financial
  Consultants
• Registered Financial Planner Institute

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CERTIFIED FINANCIAL PLANNER BOARD OF STANDARDS,
INC.

• Established in July of 1985 by the College of
  Financial Planning
• Took Ownership of CFP marks in 1986 and
  established Disciplinary Rules Procedures
• CFP Board established a single comprehensive
  examination in 1991

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Financial Planning Myths

• Myth 2 Financial Planners are primarily
  investment advisors.

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FINANCIAL PLANNING DISCIPLINES

• FINANCE Asset liability analysis, cash flow
  analysis and budgeting
• TAXATION Ordinary and investment income tax
  planning
• SECURITIES Investment analysis and portfolio
  construction
• RISK MANAGEMENT Insurance asset protection
  analysis and planning
• LAW Estate, charitable legacy planning

Financial Planners Should Be Competent Generalists
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FINANCIAL PLANNING MYTHS

• An Investment Advisor
• Any person who, for compensation, engages in the
  business of advising others, either directly or
  through publications or writings, as to the value
  of securities or as to the advisability of
  investing in, purchasing, or selling securities,
  or who, for compensation and as part of a regular
  business, issues or promulgates analyses or
  reports concerning securities. Registered
  Investment Advisor Act, Section 202 - Definitions

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REGISTERED INVESTMENT ADVISOR

• Federal or state registration required
• Activities are supervised by the Securities and
  Exchange Commission per the 1940 RIA Act
• Form ADV, Part 1 2 updated annually
• Periodic Audits
• Full disclosure required
• Part 2, Form ADV and / or
• Provide firm brochure disclosing Form ADV, Part 2
  information

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FINANCIAL PLANNING MYTHS

• Myth 3 Financial Planners are the same as
  stockbrokers or other financial salespeople.

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FINANCIAL PLANNING MYTHS

• FINANCIAL SERVICE COMPANIES
• Manufacture Distribute Financial Products
• Business Purpose Almost Always Evolves Around a
  Financial Transaction Occurring
• Planners Who Are Affiliated With A Financial
  Services Company May Be Compelled To Focus On A
  Transaction Solution vs. A Procedural Solution

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FINANCIAL PLANNING MYTHS

• Myth 4 Financial Planners only serve the
  affluent.

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FINANCIAL PLANNERS

• Financial Services Company Affiliation
• Banks, Broker/Dealers, Insurance, Investment
  Companies
• Independent Industry Definition
• Broker/Dealer or Insurance Co. Link
• Totally Independent Firm
• General or Specialized Orientation

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FINANCIAL PLANNING MYTHS

• Myth 5 Financial Planners only do big plans.

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Financial Planning Process

• Focused or Segmented Planning
• Finance oriented (Put financial house in order,
  develop an operating budget)
• Planned expense (College, wedding, etc.)
• Portfolio Construction, Inv. Policy Statement
• Risk Management Asset Protection
• Retirement Income Planning
• Estate or Legacy Planning

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FINANCIAL PLANNING MYTHS

• Myth 6 Legitimate Financial Planners only
  charge fees.

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FINANCIAL PLANNING ASSOCIATIONS

• Professional Fee Only 22
• Professional Fee-Based Compensation
• Professional Fee Commission 61
• Commission Only

College of Financial Planning 2003 Survey of
Trends in The Financial Planning Industry
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FINANCIAL PLANNING IS

• ADVICE CENTERED
• PROCEDURIALLY ORIENTED
• A CONTINUOUS PROCESS

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FINANCIAL PLANNING MYTHS

• Myth 7 Financial Planners arent worth the
  expense.

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Financial Planners

• You should have an expectation of getting what
  you are willing to pay for.
• Define the expectations and parameters at the
  onset of the engagement.

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FINANCIAL PLANNING MYTHS

• Myth 8 Most people dont need a Financial
  Planner.

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U.S. Savings Rate Remains Low

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U.S. Consumer Debt
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Personal Net Worth
Median net worth through October 2002 was
only 80,700
Median net worth for 55-64 age group is only
181,500
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RETIREMENT CONFIDENCE A Nation of Optimists

• Only 24 of Americans fear outliving their
  savings
• Forty-seven percent of workers NOT saving for
  retirement are somewhat confident of having
  enough money at retirement
• 32 of baby boomers dont spend any time on
  retirement planning
• Source 14th Annual Retirement Confidence Survey,
  Employee Benefit Research Institute, American
  Savings Education Council, Mathew Greenwald
  Associates ING U.S. Financial Services

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Longevity Increasing

• Someone age 65 today had a life expectancy of age
  64 at birth
• Someone age 65 today has a life expectancy of age
  83
• Life expectancy increased 30 years between 1900
  and 2000

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WHAT FINANCIAL PLANNING CAN DO FOR YOU

• Organize your finances
• Improve cash flow
• Lower personal income taxes
• Plan for retirement
• Plan for college expenses

• Improve investment performance
• Lower investment risk
• Reduce insurance costs
• Minimize estate settlement costs

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WHAT FINANCIAL PLANNING CAN DO FOR YOU?

• Put You In Control of Your Financial Situation
• Provide Clarity and Purpose Toward Fulfilling
  Lifestyle Goals
• Provide Financial Peace of Mind

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BEGIN WITH THE END IN MIND
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THANK YOU FOR YOUR ATTENTION!
CFG Wealth Management Services, Inc. 888-234-9674
/ mpuckett_at_cfgwms.com