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The Measurable Benefits of Having a Financial Plan in Place

05.05.2009 · Posted in Finance Articles

You hire a planner. You pay a fee. What do you get in return? You get two very different kinds of benefits. You get psychological benefits, and you get monetary benefits.nnYou get to keep the psychological benefits, which include not worrying about unfinished business, advancement toward your goals, and increased peace of mind. nnWhat about the monetary benefits? This is how most planners must justify their existence, their employment. For now, don’t even consider the long-term strategic benefits of having a plan. For now, look at just the first couple of years. The typical client will usually see a cash-an-cash measurable, identifiable return of anywhere from eight to 30 times the fee. In other words, if your fee is $1,000, you will see anywhere from $8,000 to $30,000 in identifiable returns within the first 24 months. What kinds of returns? Income tax savings. Improved returns on investments. Savings on legal fees. Savings on insurance premiums. Increased cash flow.nnOf course it would be most unprofessional if your planner tried to guarantee that return. Although, a good planner can promise that, in spite of of what you see during the first few years, you will absolutely benefit in the long term from a solid, well-thought out financial plan.nnFurthermore, a good planner ought to be busy enough with an already active clientele. That way he can make sure that, if at the end of the comprehensive data-gathering interview, he doesn’t feel he can achieve something for you that will be very meaningful, then he will bow out of the engagement.nnNo planner worth hiring wants to do busy work. He chose this career because he loves what he does. He knows that his clientele only grows when he has satisfied clients that form long-term relationships where they get ahead financially. Then in turn, the client refers him to their colleagues and neighbors. nnOnly then, does the planner and client flourish, the planner stay employed by you, and is introduced to your family and friends.nnThat is the way it should be, because like all laws regarding money happiness, everyone benefits from complying.

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