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Two Overlooked Documents That Make a Financial Plan Even Better

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The role of financial advisor is an admirable and important profession. In addition, health is perhaps the most important issue to an individual, and hence, doctors hold a special place in the hearts of their patients. Finally, pastors, priests, and other religious leaders address a crucial aspect of one’s life. In the opinion of this author, these three vocations address the most critical aspects of humanity which are: the financial or material, the physical, and the spiritual. If a person has great wealth, but poor health, they may not be able to enjoy their possessions. Moreover, if someone is healthy, but poor, happiness may prove elusive. If a person is relatively healthy and financially prosperous, but spiritually miserable, life may be a constant struggle trying to understand the reason for things that happen and the larger question of why we are here. 

Leaving the philosophical behind, in this article we’ll focus on the financial part of the equation through the practice of financial planning, and more specifically, two components not often found in financial planning output. 

Financial planning was ranked as the number one profession a few years back and for good reason. The profession, or vocation if you will, offers great income potential and places the practitioner in a position of trust due to the breadth and depth of information shared by the client. For practitioners who engage in this area, planning is an excellent way to distinguish themselves from others in their field. 

In general, a financial plan is an excellent way to condense all components of a client’s financial life into a clear and concise document. Hence, clients should derive great comfort from its contents as they fully understand where they stand relative to their goals. Normally, all plans will project retirement, analyze taxes to an extent, determine the amount of insurance a client may need, and more. In the past decade, simulation techniques have crept into planning software along with “What if?” scenario analysis. However, there are a few items of great benefit to a financial planning client but are generally absent from a financial plan. The first is a funeral directive and the second is a document locator. 

Document 1: The funeral directive is not a legal document per se, but rather a statement of the deceased’s wishes pertaining to issues such as the preferred funeral home, songs to be sung at the service and the pastor, priest, rabbi or other religious leader whom the client wishes to officiate at a funeral or memorial service.

Document 2: The document locator is an inventory of every account, real estate holding, safe deposit box and so forth. It should contain a description of the item, its location, the person to contact and their contact information. It should also be updated annually, especially if the client is approaching the upper limits of his or her life expectancy. Obviously, if the client is in poor health, keeping it updated carries greater importance.

These are just a few of the ancillary items of a comprehensive financial plan. It’s rather obvious that creating these documents does not directly benefit the advisor or lead to a sale. However, since we’re supposed to put the interests of the client ahead of our own, this shouldn’t be a consideration. This also raises the point that advisors should charge a fee for this and that planning is a top-shelf service we can offer. 

Thanks for reading and have a great week!