Financial planning has been defined as evaluating the investing and financing options available to an individual, family or company. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the individual or company in the form of a financial plan, and then comparing future performance against that plan.
Ironically, most people in Canada say that they have a financial planner, but the majority of them don’t have a written financial plan. Furthermore, many people do not know what the actual rate of return is on their investment portfolio which makes it impossible to know if they are on track to accomplish their goals based on the rate of return assumptions that were used in the financial plan. Therefore, without a written plan that is constantly updated based on the actual experience of one’s investments, most people have no idea whether or not they are on track to accomplish the financial goals that should be contained in their financial plan.
Our clients get a written financial plan that is based on their stated goals. The financial plan is reviewed and updated based on the actual results that are obtained from time to time so that clients know at all times where they are, where they are going and if they are on track to accomplish their goals in the time that they have specified. This allows for adjustments to be made to their financial plan as required in order to ensure that they stay on track to accomplish their stated goals.
Changes to the stated goals or recommended actions and the effect that these changes will have on the outcome are illustrated in the financial plan when it is updated. The financial plan is a moving target and the only thing that can be guaranteed about the plan is that it will be outdated very shortly after it is created. This is why it is paramount to update the financial plan regularly in order to ensure that the client remains on target. If they are not on target, then appropriate changes can be made to the actions and recommendations in order for the client to get back on track to accomplish their goals by the stated time horizon desired.