A comprehensive approach to developing your financial plan is key to future success. At Savant, we integrate 10 key areas of financial planning into a logical framework that we believe can help our clients identify and clarify their goals and then work toward achieving them. Let’s elaborate by providing some examples below.

Retirement Planning

When people transition from working to retirement, there is a fundamental shift in where the cash flow comes from to support the goals associated with their lifestyle. Essentially, we shift from relying on employment income to investment income to generate our cash flow needs. We build a financial plan so we can understand and manage how much risk we need to take with our investments. Without this knowledge, we subject ourselves to sleepless nights due to unexpected volatility in our investment portfolios.

Investment Planning

Now that you know what type of return you need to earn and how much risk you need to take with your investments, it makes sense to structure your portfolio to have the highest probability of achieving those risk/return objectives. Logically, you should take the least amount of risk necessary to generate the highest probability of achieving the goals in your retirement plan. Building, managing, monitoring, and reporting on this is a full-time job. Minimizing fees, rebalancing, tax-loss harvesting, consolidated household reporting, and minimizing mistakes are critical execution components necessary to integrate this area into your overall financial plan.

Tax Planning

Another key component to recognize is that our tax situation changes when our paycheck goes away and we start to live on interest, dividends, capital gains, rental income, annuity income, retirement plan distributions, and Social Security. Many of these sources of income have different tax consequences and different tax rates. Using the cash flow projections in the financial plan, the next logical step is to take advantage of these different tax rates and reduce the tax drag on the cash flow you need to support your lifestyle goals.

Estate Planning

Because your legacy goals were defined in your financial plan (i.e. leaving money to family and/or charity, etc.), it is now logical to make sure your estate documents (wills, trusts, powers of attorney, etc.) reflect these goals. Additionally, potential estate taxes at the state and federal level can be anticipated and potentially reduced or eliminated. Probably just as important for many people is reducing the burden of settling their estates, which many times falls to their children.

Business Planning

This does not apply to everyone, but even if you only have rental property as your business, you need to think about succession planning. How do you retain the value of the business if you are not there to manage it? Also, many people’s retirement plans are reliant upon the cash flow generated from the business or the sale of the business for the plan to be successful. How to maximize the value of the business and extract the wealth from it in a tax efficient manner needs to be integrated into the financial plan.

Other Planning Areas

Insurance, debt management, education planning, charitable planning, and health and wellness round out the other five planning areas that need to be fully integrated because they have unique tax and planning characteristics as well. Similar to building a house, the walls and the roof are integrated with the foundation. The logical truth about financial planning is that when one planning area affects another, those planning areas need to be fully integrated.

Integrated Planning

To help assess where you land on each of the 10 key financial planning areas, we have developed a quick three-minute assessment, which will help identify where you may have gaps in your current plan.

This is intended for informational purposes only and should not be construed as personalized investment or financial advice.

Author Donald D. Duncan Financial Advisor / Managing Director

Don focuses on high income and/or $1 million net worth clients. He earned an MBA from DePaul University and brings an evidence-based, risk management oriented, institutional perspective to investment management.

About Savant Wealth Management

Savant Wealth Management is a leading independent, nationally recognized, fee-only firm serving clients for over 30 years. As a trusted advisor, Savant Wealth Management offers investment management, financial planning, retirement plan and family office services to financially established individuals and institutions. Savant also offers corporate accounting, tax preparation, payroll and consulting through its affiliate, Savant Tax & Consulting.

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