The Power of Financial Planning

“Someone’s sitting in the shade today because someone planted a tree a long time ago.” (Warren Buffet)

As a financial life planner, my underlying assumption is that planning is a “good” thing. Planning is widely acknowledged to be a pre-requisite for business success. However, Benjamin Franklin’s advice that “by failing to prepare, you are preparing to fail” frequently falls on deaf ears in the personal environment.

This is usually, in my experience, because people feel they have neither the time nor the skills for personal financial planning; nor do they want to spend money on hiring a professional financial planner. And a few people I have met have such confidence in their ability to make and retain significant fortunes that personal financial planning is deemed unnecessary, even spineless.

So this article is about why financial life planning is important. I will share with you some of the current approaches to planning, show you how to plan in practice and highlight the outcomes.

To plan, or not to plan?

I am passionate about planning because it leads to success. I recall my first sales job in financial services, cold calling to make appointments to sell insurance. I had an excellent manager who made me plan my target market, pitch, call strategy, everything. The first call I made was spot on, leading to an appointment in minutes. I knew it was going to work, my manager knew, my colleagues knew. And it did.

So why should we plan our lives and money? In my view, for four reasons:

1. To develop a practical framework for running household finances

2. To achieve profound goals as fast as possible

3. To ensure long term financial security

4. To deal with life’s setbacks

Lets look at each of these in turn.

1. Financial framework

Many people today lack a financial framework or system. When it comes to expenses, the core of financial planning, we often enter a fantasy world. Even if families can give a reasonably accurate set of current financial statements (assets, liabilities, income, expenditure and estate), they are rarely able to project what those statements will look like ten years, or even five years into the future.

Financial planners will usually tell you that clients come to them for these reasons:

‘We are not fully in control of our finances’
‘I don’t understand money; all I feel around money is fear and anxiety’
‘We don’t know where we are now or where we will be in the future’
‘We seem unable to live the lifestyle we aspire to’

When families do achieve clarity it usually provides great relief, even if the picture does not look good. They at least know where they stand and can take appropriate action.

2. Goals

Unfortunately, we live in an era where wealth is frequently generated for its own sake, rather than as the means to live a fulfilled life. Money is used to make more money – it becomes a proxy for the ego, and financial decisions are often made to protect or massage our egos, not to support the achievement of our deepest life goals.

Life and money are deeply intertwined. Identification of clear life goals is essential to provide direction, and enables sound financial decisions to be made. So when asked to comment on an investment someone is considering, I always pose another question: “Will investing in this product enable you to achieve your goals more quickly and efficiently?” Very often the answer is that it won’t.

3. Long-term security

The impact of increasing longevity on family finances is profoundly important. The keys to addressing this are the Three Drivers of Financial Freedom: savings, compound interest and asset allocation. While saving implies a reduction in spending, and potentially the hijacking of those important and immediate life goals, financial life planning can help to resolve these difficult conflicts between the short and long term.

4. Dealing with the unexpected

Life will have kicked you in the teeth in the past and it will do so again in the future. Accept it, and plan for it. Life can throw a huge range of fastballs at us, from the irritating yet not too serious car breakdown to the death of a close family member. Put in place contingency plans centred around a Security Fund and insurance. No one likes insurance (though I have yet to meet a widow who complained her husband was over insured).


What you are really going to achieve from well-formulated goals and a structured, considered life and financial plan to achieve those goals can be clearly expressed in one word – freedom.

Freedom is a central theme of my work, so what exactly is it? True freedom comes from defining and setting boundaries and living a life dedicated to achieving your goals within those boundaries. Greater freedom comes from personal growth, the means by which we can expand our boundaries.

Lianne’s story illustrates this perfectly. A mother of two on a modest salary, Lianne had gone through a difficult divorce and when she first came to me for help, she was consoling herself with a compulsive spending habit.

However, her goals were to love, support and educate her children and to be a really good mother to them to compensate for the breakdown of the marriage. I worked with her to plan her boundaries. We established her life goals, tackled her spending and developed an annual spending plan.

One Monday morning she called me to talk about her weekend. She had taken the girls to London to see a concert and had done so without any feelings of guilt or anxiety over money. It had been in her plan. She had achieved her goal of bringing happiness and fun to her children. Within her boundaries she had achieved real freedom, to be there in the moment with her children, simply to be.

It’s the process that matters

Plans rarely survive contact with reality, to misquote Moltke. Reality for many of us can cause a change of direction. However, the process of planning is as much a benefit as the plan itself, often more so.

There are a number of planning processes around, often developed by professional bodies such as the Financial Planning Association or the Kinder Institute in the US or the Institute of Financial Planning in the UK. My own process is a six-stage process for called FUTURE:

Foundation: a full inventory and analysis of your life, including assumptions and an analysis of your risk profile
Utopia: establishing what you want to have, to do, to be
Transformation: identifying and dealing with the obstructions on the road to utopia
Utilisation of resources: establishing the best option for your existing resources
Roadmap: creating the plan to get you from where you are now to where you want to be
Execution: implementing and living the plan

Having developed a plan it is important that you continue to monitor and renew the plan each year. Planning is dynamic, a habit, not just a couple of sheets of paper to be drawn up then relegated to the bottom draw and forgotten.

The fruits of the process

We all in the financial community trust our processes, because we know they bring results, results that are more than just a written plan.

Initially you will develop a personal inventory of your life. This will include a detailed set of accurate financial statements comprising a schedule of assets, liabilities, income and expenditure, as well as data about yourself and the environments you inhabit.

Self-understanding builds on this base and by the time you are well into the process you should be able to articulate your deepest and most profound goals. In doing so, you will find yourself energised, focused and far sighted.

Finally, you will learn about money. If you are working with a coach or adviser you will have a raft of financial principles and products explained to you. If you are alone on this journey you will need to educate yourself, and there are plenty of resources out there to help.

What is the alternative to planning? Well, you can wing it; with a good deal of chutzpah, a hefty dose of confidence, a wing and a prayer and a bit of carpe diem you might well achieve great things, and get a real thrill and sense of achievement when you do. However, I do believe in the importance of living in the moment. The present is where we can really ‘be’. Crucially, financial life planning will actually help you to achieve this state by removing regrets for the past and fears of the future.

A well-structured plan will give you a thorough understanding of your situation and ensure you always have the right money in the right place at the right time to achieve your deepest life goals.

Financial Planning – A Road Map to a Secure Financial Future

Would you leave on a trip to a new destination without a map? What if your destination is a successful financial future? Without a map, would you know how to get there?

Financial planning provides a road map for your financial life. It can make the journey less stressful, more fun, and more successful. And, you can start right now – even if only a few steps at a time.

In today’s uncertain economy, financial planning has become increasingly important. With an overwhelming number of options for saving and investing, managing your finances can be difficult. Creating a financial plan helps you see the big picture and set long and short-term life goals, a crucial step in mapping out your financial future. When you have a strategy and a financial plan, it’s easier to make financial decisions and stay on track to meet your goals. Working with a CFP CM professional can secure your financial wellbeing and give you peace of mind and help you reach financial planning success.

Some people decide to do their own financial planning, but you may want to seek help from a Certified Financial Planner CM professional if you:

Want to better manage your finances, but aren’t sure where to start.
Don’t have time to do your own financial planning.
Want a professional opinion about the plan you’ve developed.
Don’t have sufficient expertise in certain areas such as investments, insurance, taxes or retirement planning.
Have an immediate need or unexpected life event.

Destination: Setting Goals
Financial planning starts with setting goals. After all, you need to know where you want to go before you can decide how to get there. Your goals can be short-term – for example, paying a credit card debt in six months; medium-term – such as saving for a down payment on a house in two years; or long-term – such as sending your kids to college in 15 years or your retirement. Write your goals on paper, including rupee terms and dates. Keep the list in sight so you can refer to it for motivation as you keep working toward your goals.

Starting Point: Where Are You Now?
Next, get a realistic picture of where you are financially. List everything you owe (liabilities) and the value of everything you own (assets). Also, track your monthly income and expenses in a notebook or on a budget form. Even if it’s not a pretty picture now, that’s OK. You’ve faced your financial situation, and financial planning will help you improve the picture.

Avoiding Potholes: Insurance, Debt, Job Loss, Taxes and Estate Planning
Financial potholes will inevitably come your way – stock market downturns, recessions, losing a job, wrecking the car, paying for an illness. You may not be able to avoid these potholes, but you can minimize their financial impact. Here are a few suggestions:

• Have adequate insurance. Insurance prevents financial catastrophes, so don’t put off getting it. Insure what you cannot comfortably afford to replace. For most people, that means having the following insurance: auto, renters or homeowners, liability, health, disability and life insurance (if someone depends on you financially). Take advantage of insurance offered to you at your job and supplements it with insurance you buy on your own. Shop for the best price, but make sure you buy from a reputable, financially sound insurance company.

• Control debt. Having a lot of debt puts you at financial risk. If you’re spending more than you earn, start using a budget to plug spending leaks, and make paying off your credit cards a top priority.

• Job loss. You can’t control the economy or a company layoff, but you can control how much time you invest in keeping your skills sharp and in meeting people who may help you find a job in the future.

• Taxes. Computer software can help you find deductions on your tax return. However, if your financial situation is complex, you may benefit from working with a tax or financial professional who can suggest tax strategies and make sure you are getting all of the credits and deductions due to you.

• Estate planning. Every adult should have these four basic documents: will, general durable power of attorney, medical power of attorney and a living will (also called a medical directive). A financial planner can guide you and refer you to an estate planning attorney to draft these documents.

There are many benefits of financial planning. If any of the above questions apply to you, it may be time to call a Certified Financial Planner CM professional to help you reach your financial goals and achieve financial success.

Is Financial Planning Necessary For Financial Freedom?

Financial Planning and how it is intertwined with your financial freedom concerns everybody. You can embrace the topic and deal with it. You can ignore the topic and live your life in a monetary mess. If you are ready to start, then we shall begin with some interesting information for everyone to be aware of when doing your financial planning. For instance, did you know that back in the 1930’s when the Social Security Administration was first created to take care of all of us when we retire, there were 40 people working for every person that was receiving benefits. In 2009 there were approximately 3 people paying in for every 1 taking benefits out and it will drop to 2 people paying in for every one taking benefits out very soon! Because of this fact, you would be well advised to make believe that social security is not going to be your retirement dream bailout. Take the position that you will have to be financially prepared for retirement and if you get to enjoy full social security benefits, well than that will just be the icing on the retirement cake that you have baked for yourself! Your financial freedom will be that much more rewarding if you can retire without social security. Of course if the program is there for you, take it!

Ben Franklin said “By failing to prepare, you are preparing to fail”. So many of us just slip through life without ever giving a thought to any plan…financial or otherwise! Of course if you choose not to plan, well then THAT IS A PLAN! Not a good one, but a plan nonetheless. This lack of true financial planning will come back to haunt you in your quest for financial freedom.

So what exactly is Financial Planning? I am glad you asked because the answer is multifaceted and includes all the various life processes that you will go through. It includes significant events such as budgeting and cash flow, education funding for you and your family, investment planning, tax planning, insurance planning, estate planning, and retirement planning, all of which we will call sub-plans. Very often, people will seek out the help of a professional because of the complexity of some of these concepts. Equally important, a person needs to understand how a financial decision in one area of the master plan impacts the other areas of the plan and what the consequences will be. Your ultimate financial freedom will be based on sound financial planning of these various entities.

An effective financial plan looks at all the aforementioned sub-plans while considering one’s lifestyle and resources. Sometimes patience and sacrifice are an integral part of the overall plan in order for an individual sub-plan to be carried out. Additionally, each sub-plan should have attainable goals involved with a timetable attached for achieving these goals where appropriate. Of course a good plan will be flexible enough to take into account life altering events such as getting married, buying a house and raising a family. The final point to understand is this: just because you took the time and energy to put your plan in writing does not mean that it will be carried out. You must work very diligently to see your plans to fruition. Here is where the weak among us seem to “drop the ball”. Do not let that happen to you and your financial planning as your financial freedom is at stake.

Understanding Financial Planning

Financial planning is defined as a process whereby an individual or a couple settles objectives, assesses all resources and assets, estimates any future financial needs, and makes necessary plans to achieve any monetary goals they may have. It includes a variety of factors, such as cash flow management on a daily basis, selection and management of investments, as well as insurance needs. There are numerous elements that are involved with financial planning. This includes items such as risk management, allocation of assets, investing, estate planning, retirement planning, and tax planning. The strategy that is created offers a tailored approach that satisfies any present financial concerns as well as offer financial security for the future.

When a person wants the most out of the money they earn, this tool can play a starring role in achieving that outcome. Through careful financial planning individuals or married couples are able to set certain priorities and work toward achieving any long term goals they have set forward. It also provides a bit of a safeguard when it comes to the unexpected, such as income loss, unexpected illness, or work-related injuries.

No two people will look at financial planning the same, because everyone has different ideas regarding what their it will encompass. For some individuals, financial planning means finding investments that will offer security once a person or a couple retires. For other people, it is making investments and saving to have money ready for when children go off to get a university education.

When going about financial planning, it is best to obtain the services of a professional financial planner. Financial planners offer guidance and advice when it comes to any issues regarding financial planning. With life being complicated and sometimes hectic, it can be difficult to find the necessary time to manage future financial affairs. Not only that, but financial planning is often a multi-disciplinary task that “Average Joe’s” are just not capable of understanding. A financial planner will look at the current situation of a client and all future objectives. They will analyze the current financial status of the client and then recommend a financial plan that will suit both present and future needs.

Details of the financial plan may include retirement plan contributions, portfolio of investments, a budgeting plan for all current living expenses, and projected savings growth.

Unfortunately, many people delay in preparing for the future as they are too busy maintaining their current financial situation. No matter what a person’s income level is or their future plans, financial planning is essential to any future goals. With the assistance of a financial advisor, any individual can implement successful financial goals. They will also aid in maintaining the necessary discipline to stick with the plan. And do not worry if there are changes to a personal situation, such as a birth of a child, financial plans are not written in stone. The financial planner will aid in changing things around to ensure everything is properly maintained and a person’s financial future is properly taken care of.

KDK Accountancy Corporation with Katz, Daitzman & Kiesel CPAs, LLP (an Orlando CPA Firm) is an accounting firm offering comprehensive services to Central Florida businesses and individuals. We apply expertise for our clients ranging from setting up day to day accounting systems to preparing the most diverse and complicated tax return.

Our wide range of services include accounting, bookkeeping, tax preparation, tax planning, IRS problem resolution, and all areas of financial and estate planning. We are a certified QuickBooks Pro Advisor and can work with clients with all aspects of implementing and perfecting accounting software performance in the business environment. Our services are designed to assist companies with the obstacles they encounter in order to help their businesses run smoothly and efficiently.

Financial Planning For Business Owners

Business owners are not looking for financial advisors to give them the life they want by making a killing in the stock market; these people have been able to create the life they want by themselves. In the early 1990s, at the beginning of my financial planning career, I was very fortunate to meet one of Canada’s most successful businessmen. He was in his late 50s and had much more life experience than me. He shared that 99.9 per cent of the investment advisors he had met over the course of his career did not have the foggiest idea of how to make money nor did they understand what successful business people were looking for when they sought out professional advice.

He told me that when he took a risk he got paid for it. He could buy a piece of property for a marginal amount, get it rezoned for a shopping mall and then get franchises to sign letters of intent to lease for five years or more when the property was developed. Once this was done he would go off to the bank and borrow on the future revenue that would be generated from these highly profitable leases to develop his properties and create a residual income. He knew he could take his own money and make 100 times the amount with 1/10th the risk that any stock broker could offer him and he was right. Business owners are not looking for financial advisors to give them the life they want by making a killing in the stock market; these people have been able to create the life they want by themselves.

Successful business people want their financial advisors to show them ways to keep their wealth. In essence, successful people want their financial advisors to provide them with financial, tax, succession and estate planning holistic solutions. They don’t need their advisors to sell them products such as stocks, mutual funds and life insurance to achieve their financial success. The point is they are already successful. Business people are looking for financial professionals who are positioned in the role of wealth manager. Someone who can see and understand the affluent business owner’s big-picture needs by constructing customized strategies to achieve their specific goals of wealth preservation, avoidance of unnecessary tax burdens, creditor protection, wealth accumulation and wealth distribution to themselves, their family, estate and charities.

Successful business owners have an understanding that a financial asset is something that puts money in their pocket, with minimum labor. They understand that a business can buy a car, but a car cannot buy a business! Liabilities are things that take money “out of one’s pocket.” For example a home is a liability even though you own the property with no mortgage, you still have to pay property taxes, utilities, and maintenance.

There are numerous advantages available to those who own their own business, who take the risk and have the creativity and fortitude to do something on their own. These people are compensated for it. As an employee in Canada, one’s equation of earning an income goes like this:

you earn;
you’re taxed;
then you get to spend what is left over.

When one is a business owner and self-employed in Canada, our government allows you to adopt a much more favorable equation of earning an income:

you earn;
you spend, you income split, and you defer bonuses;
then you are taxed on what is left over!

Business owners are different from the rest of Canadians, if for no other reason the Income Tax Act favors people who work for themselves. The biggest expense we pay in a year is taxes. Reducing taxes is not only morally and ethically right, it is also smart. There are three easy rules that keep your money in your pocket in this country and not in the government’s:

1. Find the right business structure for your business to pay less tax and protect what you have.

2. Learn to make more money by using the tax strategies of the rich such implementing health & welfare trusts, individual pension plans, retirement compensation arrangements, holding companies, charitable donations and estate freezes.

3. Pay less tax legally and still sleep at night.

The basis of success with working with a Certified Financial Planner is to have a financial plan. A true financial plan is more than simply buying and selling investments, or collecting “assets” that bring in no cash and are thus more akin to liabilities. The way most people invest, they might as well be driving in a circle. A true financial plan is mechanical, automatic, and boring. It applies “The Total Financial Planning Process.”


Clarify your present situation by collecting and assess all relevant financial data, such as lists of assets and liabilities, tax returns, records of security transactions, insurance policies, will(s) and pension plan(s).


Decide what you want to achieve by identifying financial and personal goals and objectives. Work with your financial professional to help clarify your financial and personal values and attitudes. These may include selling your business, providing for children’s education, supporting elderly parents or relieving immediate financial pressures to help maintain a current lifestyle and provide for retirement. These considerations are important in determining your best financial planning strategy.


Identify and recognize financial problems that can create barriers to reaching your financial goals.


Understand your choices, your financial professional should provide you with written recommendations and alternative solutions. The length of these recommendations will vary with the complexity of individual situations.


Implement the right strategy to ensure that your goals and objectives are met. A financial plan is only helpful if the recommendations are put into action.


To ensure that your goals are achieved it is very important to have periodic reviews with your Certified Financial Planner and other financial advisors to see if there should be revisions to your plan. Successful business people in this world look for and build networks of experts to help them achieve their life and financial dreams. The key to managing your financial future is to plan for it.

All highly successful people I have every work with had a very clearly defined, written life, career and financial plan. They believed implicitly and unshakably in their plan and were impervious to external circumstances. So they didn’t alter their plan every time the wind changed direction, and continued to work their plan steadfastly, no matter how long it took, until their plan inevitably succeeded.