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What Is the Value in Financial Planning? | WT Wealth Management White Paper


Many people assume financial advisors simply manage their clients' investment accounts, i.e. pick stocks, select ETFs, determine risk tolerance, set a target asset allocation, etc. While this is a very important part of what we do, investment management is only one component of a more comprehensive service known as financial planning. Now you may be asking yourself: "What is the value in financial planning? I'm not wealthy, do I really need a financial plan? What does financial planning even mean?"

Financial planning involves stating goals and objectives, identifying risks, developing an actionable plan, monitoring progress and updating the plan as circumstances change. To many people this is a daunting exercise, but it is critically important. To what degree you develop and stick to your financial plan could have a meaningful impact on your financial comfort now through retirement. This is where a financial professional can help.

As financial advisors, we routinely help clients make important financial decisions, such as when to pay off a home, budget for a bucket list vacation, finance a kitchen remodel or add a guest house to their property. As important as helping you understand what you should be doing with your money, a financial planner can be instrumental in helping you understand what you shouldn't be doing. Financial planners can help you avoid a host of financial missteps - like taking distributions from the wrong accounts at the wrong time, taking Social Security too early or too late, retiring before you are financially prepared, or committing to a large purchase or financial obligation such as a wedding or college education without understanding the impact of the decision on your overall financial plan.

A financial planning professional not only can help you build your initial plan and provide technical advice, but can also provide coaching and ongoing emotional support. This may sound a bit intangible (and it is!), but it is critical to your success. On countless occasions, we have helped clients through the grieving process of losing a spouse, child or parent. Having a trusted financial advisor navigating the financial complexities of these situations in the background allows these clients to give full attention to family, friends and the grieving process during these difficult times. This is the true value proposition inherent to financial planning services.

Financial Planning


 We have also learned that given no guidance investors will nearly always make the wrong decision at the wrong time. As humans, we have a natural impulse to avoid risky situations, including market volatility. But that inclination to run away by selling during a market downturn or periods of exceptional volatility invariably come at a financial cost. As the chart below shows, the point of maximum financial opportunity nearly always coincides with when you feel most vulnerable and depressed, and the point of the greatest financial risk is when investing feels easy. Selling at the bottom and buying at the top has never made an investor a penny. Research shows that investors who work with a professional advisor are more likely to stay committed to their financial plan during market downturns and avoid panic selling. (1)

Cycle of Market Emotions


 Professional financial planning can give you a psychological boost that could make you measurably happier by reducing stress and freeing up your time to focus on the things that matter to you. Choosing how you spend your time can have a huge impact on your happiness and well-being, regardless of financial stressors.

So, in a nutshell, professional financial planning can potentially lead to better decisions, more money, less financial risk, less stress, more leisure time at your disposal and a happier life. How's that for value?


Sources
  1. Top 5 Mistakes Investors Make in a Market Sell-Off
    MorganStanley.com



WARRANTIES & DISCLAIMERS

There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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