Achieving Financial Results that Matter

With the dawn of the new year, many people make resolutions to lose weight and start exercising. But before long, they are back at the drive-thru window or on the couch. What goes wrong? Without a detailed plan – such as daily calorie counts and a workout schedule – these resolutions are useless.

Financial resolutions are no different.

"Resolutions are not the right approach to financial planning. A resolution can be vague and easy to abandon two weeks later," says Tom Curti, co-founder and principal at Wealth Dimensions. "Instead of coming up with broad and undefined resolutions, you should commit yourself to making some meaningful changes driven by a clear set of goals. Providing that context motivates people to make the commitment."

In a 2014 study released by Fidelity Investments, its New Year Financial Resolutions Study, 46 percent of people said they "typically consider" making financial resolutions. Although the study points to increasing long-term goals over short-term goals – with the three main goals being to save more, spend less, and pay off debt – those with a financial resolution may still be missing the bigger picture.

"Simple changes in behavior are a step in the right direction, but they do little to put you on the best path to financial security," says Doug Loftus, co-founder and principal at Wealth Dimensions. "An effective financial plan provides a detailed assessment of your current situation and becomes a tool to guide you in making informed decisions through all life’s stages and circumstances." 

Everyone is concerned about his or her financial future, but Curti and Loftus have found that the higher a person’s income, the larger the gap in the income needed at retirement to maintain lifestyle. For those who have not developed a meaningful plan to address this gap, anxiety can run high. In fact, consumer studies show that people with detailed financial plans make better decisions and experience less anxiety and confusion than those who do not.

Having a detailed financial plan provides a framework for achieving goals. According to the Financial Planning Association (FPA), "Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Financial planning is a process, not a product."

What does it take to create an effective financial plan? Loftus and Curti have identified specific steps that are essential to the process.

Step 1: Discovery – Identify and define your goals

Step 2: Assess – Inventory financial resources and structure

Step 3: Analysis – Develop strategic and tactical ideas

Step 4: Implement – Integrate strategies and resource alignment

Step 5: Monitor – Oversight of your financial plan and portfolio performance

Step 6: Evaluate – Adjustment for changing market conditions and lifestyle needs

Although this process might look simple, it requires an in-depth look at all aspects of life. An effective plan is able to seamlessly weave the numbers with lifestyle issues unique to every family. Each individual’s plan should help accumulate wealth and coincide with purpose. According to Curti and Loftus, when done properly, clients feel a sense of peace and empowerment, which does not waver with market swings and life’s twists and turns.

Curti and Loftus make sure clients leave with a specific plan in place and a weight off their shoulders. They do this by acting as coaches and counselors, discovering what goals are most important to the client and by asking the right questions.

"For us, it’s rewarding to hear back from clients who have not experienced a process like ours before, and see them gaining insight into what they really want and what it takes for them to get there," Loftus says.

The goal "to retire" without meaningful commitment, specific details, and a viable plan is no better than a fleeting New Year’s resolution.

For more information on what an in-depth financial plan should cover, visit www.wealthdimensions.com/financialplanning.

Wealth Dimensions is located at 11300 Cornell Park Drive, Suite 300, Cincinnati, OH 45242. You can reach them at 513.554.6000 or visit their website at www.wealthdimensions.com.