Myth #1: “My situation is very simple. Comprehensive planning is overkill.”
Some people may feel that their situation is straightforward and therefore does not require a financial plan. This stems from a misunderstanding of exactly what constitutes a plan and an assumption that planning is always a comprehensive endeavor. The truth is that planning should always meet you where you are and be scalable to your situation.
For many, a fully comprehensive engagement is an appropriate solution. However, for others, there may be one or two simple ideas that will make a significant difference for their financial security now and later.
Planning can help uncover these issues and define solutions, while also posing questions to clarify some things you and your outside advisors may not have considered. Regardless, complexity does not equal good planning and the net result of every planning experience should reflect that.
Myth #2: “I have an attorney and CPA…they have this covered.”
To be clear, financial planners are not a replacement for your current advisors, but they can be an excellent complement to them. Your attorney and CPA are key advisors with very specific roles, training, and skills built around their proficiencies.
Planners work more across disciplines, taking a client-centric look across all aspects of your financial situation, encompassing tax, legal, investments, and insurance. This unique vantage point allows your planner to connect the dots, providing an integrated, unbiased resource that is truly holistic. They provide this service acting solely as client advocates, suggesting alternatives appropriate for your situation while simultaneously breaking complex topics into simple everyday language. This valuable “second set of eyes” can help validate strategies enacted by each of your outside advisors, streamlining them and assuring that they are not in conflict.
Myth #3: “I don’t need planning because my estate will fall below the federal estate exemption amount.”
While federal estate tax liability is an important estate planning consideration for some, it is far from the only concern holistic financial planning can address. Many states set estate tax thresholds below the federal level or levy inheritance or other taxes. Proactive planning can begin to address these issues and minimize their impacts. Charitably inclined investors may wish to explore strategies for using their estate to address their philanthropic interests.
Additionally, many mistakenly think that the drafting of a will is the only step needed to avoid probate—a very public and drawn out process for distributing assets after death. While this is not the case, a planning consultation can help confirm that you are taking the additional necessary steps.
Outside of the estate planning realm, planning can also help provide actionable metrics around the exercise of stock options or advice on how to help protect assets against taxes and inflation, to name only a few. Because of these and other solutions, planning can be just as important for people who do not expect a federal estate tax liability as those who may.
Myth #4: “Planning is all about retirement funding which is not an issue for me.”
Planning is really about aligning your financials to help you live the one life you have the best way you can. For some, this equates to defining and funding a successful retirement. For others, it may mean addressing their charitable interests, transitioning a business or managing and leveraging debt.
A plan can benefit everyone so long as it is based on your specific situation and aligned around your needs. Life is about choices—some made consciously and others unconsciously. Planning helps outline the implications of our financial choices and helps you to confront them proactively.