There are many approaches to financial planning, and each can have its time and place, depending on the advisor and the client they are best suited to serve.
One of the things that makes finding a financial planner challenging for people is the many different types and methods of financial planning. Different fee models, different-sized firms, and different methodologies for the multiple factors that go into a complete financial plan, such as savings, asset allocation, debt management, tax planning, charitable giving, legacy planning, and so on.
Our focus has always been working with people who are looking for help making the right decisions so they can feel confident about their financial situation and who want a plan that focuses on what they value and prioritize.
That all sounds well and good, but what does it really mean if you work with us?
We usually meet with a new client approximately four times in the first year. The focus of these meetings can vary depending on your situation and priorities, but typically, we focus on the following topics:
Meeting #1: Information gathering & Goal setting
Meeting #2: Plan review, recommendations, and implementation proposal
Meeting #3: Investment management & retirement income planning
Meeting #4: Tax planning & Review of upcoming goals
What comes first?
Meeting #1: Information gathering & Goal setting
The first step is usually the one where you do most of your heavy lifting: putting together a thorough picture of your current financial situation. This means gathering as much detail and documentation as you can reasonably provide to us about areas such as;
Current income/recent paystub
Real estate holdings
Business ownership
Taxable, tax-deferred, and tax-free (Roth) account balances
Investment risk tolerance
Living expenses (housing cost, groceries, childcare, pets, and all the rest)
Current Debt
Upcoming significant events, and any other information that may factor into your financial plan as a whole.
Once we have had time to review the information provided, we usually have a few clarifying questions to help us fully understand the intricacies of your current situation. We will schedule a meeting to walk through the information provided, ensuring we have a thorough understanding and can model your plan correctly.
After discussing the various details listed above, we also work with you to complete a goals exercise. This is where we begin to look beyond the numerical aspects of your situation, which, frankly, can be the simpler part. The truth is, to build a financial plan that provides guidance on which decisions to make and that you can feel confident in, we have to understand which aspects of life are most important to you and how those different aspects shape how you think about your life and your finances.
I could write at length on how important it is to discuss with your financial planner what ideas, values, and goals matter to you, but for now, I will say that the most successful relationships we have with our clients are the ones where the clients have taken the time to share with us what their goals are. These can be goals like vacations or home improvements, to be sure, but also the things they hope to help their kids achieve, pursuits they have put off for years because they weren’t sure the resources were feasible for them, or ways they want to support and contribute to the communities that matter to them. Getting a complete picture of the most important aspects of the future plan helps us ensure we are creating a plan that puts those values and goals first.
Meeting #2: Plan review, recommendations, and implementation
After we have thoroughly outlined and documented the details and goals, we prepare a comprehensive document that outlines the assumptions and approaches used, as well as the recommended actions to support the goals we had discussed. We present this plan in our second meeting and then begin implementing it based on your priorities. The first steps often include;
Consolidating & moving investment accounts so we can begin managing them
Rebalancing the household portfolio per your risk tolerance.
Building a bond ladder to remove funds that you know you will need in the near future from market volatility
Implement a guardrails approach for portfolio withdrawals.
Set up recurring withdrawals to fund living expenses (if applicable)
Debt reduction strategies
Social Security timing decisions
Determine & document what tax planning decisions may be relevant in the future for your plan
Review of current insurance coverage
Review of current estate plan
We take care of the majority of these actions for you by outlining what and when each step will occur, and what will be required of you to complete them, which, in most cases, is simply providing e-signatures to move accounts and provide additional documentation as needed for things like insurance coverage and your estate plan.
Meeting #3: Investment management & Income planning
Once accounts have been moved to one of our custodians, either Charles Schwab or Altruist, we rebalance the accounts based on an agreed-upon Investment Policy Statement. Depending on the phase of your career, this meeting can focus on one of two directions. If you are still a few years away from retirement, we will focus on your current & future savings goals and needs, and on what decisions you may make in the years leading up to retirement to set yourself up well for when you fully retire.
If you have already retired or retirement is imminent, we will spend more time discussing how your income sources will change after retirement, and discuss what tools are available to protect the funds you will need once you begin withdrawing from your savings & investments. We review the specific expenses & needs for funds in the next few years and often recommend building a bond ladder to immunize a portion of your portfolio from market volatility and cover mid-term living expenses.
This is also where we would further discuss the details of a guardrails approach, which fundamentally is a strategy for managing income in retirement. Rather than relying on the 4%, or newly updated 4.5% rule for portfolio withdrawals, the guardrails approach is a way to answer the question of “how much can I spend in retirement” based on all of your potential sources of income, your total portfolio balance & expected growth, and your spending needs. We analyze the different outcomes based on the income sources available to you to create what we call a Withdrawal Policy Statement, which shows you how much and when each income source is available.
Meeting #4: Tax planning & Review of upcoming goals
Finally, we review tax planning with clients every fall. This involves gathering information on your projected total income for the year, so we can analyze the opportunities available this year. We look for opportunities in areas such as:
Long-term gain harvesting
Capital loss harvesting
Roth conversions - based on a long-term projection of future tax rates
Depending on your scenario, we also look into the potential for charitable deductions, annual gifting strategies, and asset location strategies
While we do not offer tax advice and always recommend conferring with a tax professional or your tax preparer on tax-related decisions, our approach to tax planning is to lower your total lifetime taxes to help avoid higher tax brackets in retirement from sources such as required minimum distributions and the Social Security tax torpedo.
What comes next?
At this point in the process, you should have a clear picture of your financial plan, your near- and long-term goals for maintaining it, and what working with North Haven Financial looks like. After the first 12 months of working with a new client, we typically meet twice a year, but we continually work to ensure your plan is maintained and up to date. Our annual service calendar is available for reference on the work we are doing behind the scenes to keep you informed of any decisions that may need to be made.
We are always available to meet or talk about anything that may come up in your life. Our goal is to ensure your questions are answered promptly and that each of us takes the necessary actions to make your financial plan successful. More importantly, we want to make sure you are comfortable, confident, and excited about creating a fulfilling and enjoyable life.
If you have been considering working with a financial planner or have specific questions about our process, please reach out to us. We would be happy to talk with you about how we can help.