Financial Plan

Workflow

Step 1: Client Profile

Gather or confirm:

• Demographics: Age, spouse age, dependents, life expectancy assumptions
• Employment: Current income, expected raises, retirement age target
• Accounts: All investment accounts with balances and asset allocation
• Income sources: Salary, bonuses, rental income, Social Security estimates, pensions
• Expenses: Current annual spending, expected changes (mortgage payoff, kids' independence)
• Liabilities: Mortgage, student loans, other debt
• Insurance: Life, disability, LTC, health
• Estate: Wills, trusts, beneficiary designations, gifting strategy

Step 2: Cash Flow Analysis

Build annual cash flow projections:

Key inputs:

• Inflation rate assumption (typically 2.5-3%)
• Tax rate (marginal and effective)
• Savings rate and where savings are directed (pre-tax, Roth, taxable)

Step 3: Retirement Projections

Accumulation Phase:

• Current portfolio value
• Annual contributions (401k, IRA, taxable)
• Expected return by asset class
• Monte Carlo simulation: probability of success at various spending levels

Distribution Phase:

• Required annual spending in retirement (today's dollars → inflation-adjusted)
• Social Security start age and benefit
• Pension income (if any)
• Portfolio withdrawal rate and sequence
• Required Minimum Distributions (RMDs)

Key Output:

• Projected portfolio value at retirement
• Sustainable withdrawal rate
• Probability of not running out of money (target >85%)
• "What if" scenarios: retire early, market downturn, higher spending

Step 4: Goal-Specific Analysis

Education Funding

• Children's ages and target college start
• Current 529 balances
• Target funding level (public vs. private, 4-year vs. graduate)
• Required monthly savings to reach goal
• Financial aid considerations

Estate Planning

• Current estate value and projected growth
• Estate tax exposure (federal and state)
• Trust structures in place
• Gifting strategy (annual exclusion, lifetime exemption usage)
• Charitable giving plans
• Beneficiary review

Risk Management

• Life insurance needs analysis (income replacement, debt payoff, education funding)
• Disability insurance adequacy
• Long-term care planning
• Umbrella liability coverage

Step 5: Scenario Modeling

Run key scenarios:

Step 6: Recommendations

Prioritized action items:

1. Savings rate changes
2. Asset allocation adjustments
3. Tax optimization (Roth conversions, tax-loss harvesting, asset location)
4. Insurance gaps to fill
5. Estate document updates
6. Beneficiary designation review

Step 7: Output

• Financial plan document (Word/PDF, 15-25 pages)
• Cash flow projection spreadsheet (Excel)
• Retirement projection charts
• Goal funding analysis
• Scenario comparison table
• Action item checklist

Important Notes

• Financial plans are living documents — review and update annually or after major life events
• Be conservative with return assumptions — overestimating returns gives false confidence
• Tax planning is as important as investment returns — model tax implications of every recommendation
• Social Security timing is a major lever — model start ages of 62, 67, and 70
• Always stress-test the plan — a plan that only works in the base case isn't a good plan
• Compliance: ensure recommendations align with suitability/fiduciary standards