Studies consistently show that Americans are not prepared financially.
One of the biggest contributors to this dilemma is the lack of a true financial plan. Paul Winkler wrote Confident Financial Planning to help address that need.
This article explains:
- What a true financial plan is
- Different types of financial planning books
- What a financial planning book should cover
- Paul Winkler’s qualifications
By Michael Sharpnack
What Is a True Financial Plan?
A true financial plan is a set of financial goals along with specific steps to achieve those goals.
A proper financial plan takes both: goals and action steps.
Only having some ideas about what you would like to achieve with your finances is not enough. You need specific goals. If you don’t know where you’re going, how are you going to get there?
For example, saying, “I want to have enough for retirement,” is not a good goal because it’s too vague. How much money do you need? What do you want retirement to look like?
The SMART goals acronym is widespread, so I won’t cover it, but it’s a helpful exercise to go through to clarify your goals.
But many people face a dilemma with setting financial goals: They don’t know what they can achieve. For instance, you might have a lofty aspiration, but what if you can’t reach it? It might feel easier to avoid setting the goal altogether, so you don’t get your hopes up and risk a potential failure.
The other challenge with setting goals is actually knowing what goals to set. You don’t know what you don’t know. If you’re unaware of certain estate planning or tax strategies, or if you’re unaware of the risks you’re exposed to, then you won’t be able to list all the goals you need because you don’t know you need them. That’s where planning comes in.
But you can’t only have goals. You also need action steps to achieve them.
These action steps also must be specific. For example, “saving more” as a goal is unhelpful. How much do you need to save? What type of tax treatment should your savings be? What should the investment mix be?
This is where deep financial knowledge is critical. You must understand tax law, insurance, estate law, investing, and general financial planning principles.
Action steps require specific strategies, and specific strategies come from understanding the ins and outs of finance.
Many bad strategies are out there—even from advisors—so you must understand financial planning to sniff out the bad strategies and to choose the right strategy for your situation.
Confident Financial Planning is a guide to help you do that. It’s not written to be a comprehensive financial planning textbook—far from it—but it does cover all the essential areas of financial planning and gives some of the core strategies you should know in each area.
In short, this book helps you make good financial planning decisions.
What Type of Financial Planning Book Is This?
Many different types of financial planning books—with different goals—are on the market.
Some financial planning books are for young audiences, and some are for retirees. Others are for absolute beginners, and some are for experts. Some focus on getting out of debt, some focus on investing, while others focus on general financial tips. Some are entertaining, while others are dry textbooks.
Paul wrote this book for anyone looking to create a financial plan for their future.
Confident Financial Planning walks you through creating your own visual financial plan.
It strikes a balance between detail and accessibility. The book doesn’t teach you everything there is to know, but it makes you aware of the most important things. It helps you know the limits of your knowledge, so you know when you need to seek outside help.
This can be a problem with many books on finance. They may give the impression that by reading the book, you are now an expert and prepared to make good financial decisions. But that’s impossible with any single book. There’s too much to know.
Instead, this book covers all of the topics that you need to know, with enough detail to be useful, but not too much to be dry.
What Should a Financial Planning Book Cover?
That depends on the goal of the book and for whom it’s written. But any book on financial planning must cover all the essential areas of a financial plan.
That last statement may sound obvious, but you would be surprised how many books are too narrow or biased toward one particular area of financial planning.
Paul uses the illustration of a castle and moat to describe the core areas of a financial plan:
Your assets make up the castle, and the moat makes up the risk management and specific strategies that protect the castle.
The key areas are:
- Risk management
- Tax planning
- Retirement planning
- Estate planning
- General principles
Every area of planning affects the others.
If you took one section of a castle out, the rest would fall down, or if you didn’t have a moat, the castle would be vulnerable. Therefore, you must address all areas of your financial plan.
The problem with much financial planning—and many financial planning books—is that it’s done by people who work on commissions in one specific area, so you’re not able to coordinate the parts with the whole.
Confident Financial Planning covers everything so you can come away with a comprehensive picture of your finances.
Here’s a summary of the key areas of financial planning:
- Risk management: What risks are you exposed to and what are the best strategies to protect yourself from those risks? Primary topics are savings, emergency funds, and insurance.
- Investments: What type of assets should you use to achieve your savings goals? Different goals often require different types of investments.
- Tax planning: Strategies that you can use to save taxes to achieve your financial goals more efficiently. This includes tax-advantaged investing.
- Retirement planning: Creating a plan to build the retirement that you want. You must know how to project your retirement assets and expenses and the best strategies to get you to retirement.
- Estate planning: Where will you leave your assets when you die? How do you set up a will? Do you need a trust? What types of investments are best to leave, and what strategies can save your heirs taxes?
General principles is a catchall for core concepts of financial planning that don’t neatly fit within the other categories. Some of the topics included here are the time value of money, budgeting, and debt management.
A book designed to help you create a financial plan must include all these areas.
About the Author
Experience and education are important for an author of financial planning books. Many are written either by salesmen or by writers without financial planning degrees and hands-on experience with clients.
Paul Winkler has eight financial planning degrees and over thirty years of experience guiding clients with their finances. This experience is essential for knowing what—and what not—to include in a book.
Confident Financial Planning abounds with practical examples from his experience that help you see how to apply the information to your situation.
It also contains graphs and charts to visualize the points.
Like countless others in the financial services industry, Paul got his start through insurance and mutual fund sales. Paul quickly became frustrated with the training—which was focused on sales, not true financial planning—and sought additional education.
After further education, however, Paul only became more frustrated with the sales techniques he was told to use and the products available for him to sell.
His breakthrough came when another advisor at a convention told him to seek education outside the financial industry—education from the world of academics who study investing.
Paul then discovered the teachings of Eugene Fama (2013 Nobel laureate in economic sciences) and other investing academics. He began studying the investment research that came out of the academic circles from such places as the University of Chicago, Yale University, MIT, and Harvard, to name a few.
Paul says, “What I learned was completely different from what I was taught by the broker dealers. I discovered a way of investing that made logical sense and wasn’t fueled by making a commission. I was hooked.”
Not long after that, Paul was compelled to start his own business. He could no longer work for the broker-dealer selling products in good conscience. He wanted to offer clients an experience that took their entire financial situation into account, used the academic research on investing, and focused on coaching instead of selling.
Become Confident About Your Finances and Buy ‘Confident Financial Planning’
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