Do I actually need a financial plan?

Not everyone who works with a financial advisor needs a comprehensive financial plan. Sometimes the question you’re trying to answer requires looking at several parts of your financial life together. Sometimes it doesn’t.

You don’t need to know what kind of financial advice you need before you have the conversation. The first thing I want to understand is simpler:

What are you trying to figure out?

Maybe you have a 401(k) at work, an IRA from an old job and some other investments. You’re getting closer to retirement and starting to wonder whether all of those pieces still make sense together.

At first, that sounds like an investment question.

But if you’re hoping to retire in five or six years, or possibly sooner, there may be some other questions worth asking. Where will your income come from when you retire? When are you thinking about taking Social Security? Does your spouse have retirement savings or a pension? How much will you need to draw from your investments?

Once we start answering those questions, we may discover that the investment decision is connected to several other decisions.

That’s when a more comprehensive financial plan may be useful.

Or we may discover that it isn’t.

How much of the picture do we need to see?

I don’t think every financial question needs to become a comprehensive planning exercise.

If you come to me because you’re trying to make a particular decision, I need to understand enough of your financial picture to know what else that decision might affect.

For example, if you’re deciding whether you can retire earlier than you originally planned, we may need to look at your investments, expected expenses, Social Security timing and other sources of retirement income. We may need to consider your spouse’s plans as well. Looking at one piece in isolation probably won’t tell us enough.

In that situation, a comprehensive financial plan can help us see how those decisions work together and evaluate different options.

Another person may have a much more contained question. Their retirement income may already be well defined, and what they really need is an investment strategy. Or they may be going through a financial transition and need help evaluating a particular set of choices.

The amount of planning should reflect the decision we’re trying to make.

When does a financial plan make sense?

For me, the question isn’t whether I can create a financial plan for you. It’s whether creating one will help us make better decisions.

If we start looking at your situation and find enough interconnected pieces that we need to evaluate them together, a comprehensive plan may make sense.

If we don’t, I’m not going to create a financial plan just so we can say we created one.

We may determine that you need an investment strategy and ongoing investment management. We may need to work through one particular decision. Or we may discover that the question you came in with is connected to several others and a more comprehensive planning process would be worthwhile.

We figure out what you’re trying to accomplish first. Then we determine how much planning it takes to get there.

You don’t have to know before you call

People sometimes hesitate to contact a financial advisor because they aren’t sure what they need.

That’s okay.

You don’t need to decide in advance whether you need a comprehensive financial plan, investment management or something more focused. Making that decision before anyone has looked at your situation may be getting ahead of things.

Start with the question you’re trying to answer.

Figuring out what kind of help you need is part of the conversation. Schedule yours.