Working With A Financial Planner

Frank Sinatra said it best…

“Love and marriage, love and marriage,
Go together like a horse and carriage.
This, I tell you brother,
You can’t have one without the other.”

Like it or not, investment management and financial planning, in its purest form, go hand in hand as well.

Put another way, investment management without financial planning is like a doctor prescribing a medication without knowing the patient’s allergies. Action is being taken to try to fix the problem, but not knowing the potential side effects could compound the issue.

Too often, individual investors and “financial advisors” construct investment portfolios without understanding the level of risk that is necessary to achieve stated goals. When this approach is taken, the only way to measure success is to wait and see if the goal was attained. Financial planning in its purest form serves many purposes, most of which are quantifiable. Two of it’s most important aspects, as it pertains to investing, are education and understanding, both of which cannot be quantified.

As financial planning professionals, it’s our job to discuss the many facets of investing and their potential impact on your stated objectives. Stocks vs. bonds, risk vs. return, asset allocation…the list could go on and on. Without this education, it is nearly impossible to understand the inherent risks of investing and the potential impact it could have on your future goals. Not only should a professional discuss these matters with you, but they should also visually demonstrate the various effects risk can have on desired goals. Only after a thorough discussion and visualization of the effects of risk should you consider yourself educated enough to determine the level of risk necessary in your portfolio. Without comprehensive financial planning, it is nearly impossible to reach this level of understanding.

For these reasons, we believe financial planning and investment management go hand in hand…As Frank says, “you can’t have one without the other.”

About the author

Justin Rush, CFP®

3 Comments

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  • Is it legal for a long term disability insurance company to subtract from their payments the amount of SS I receive, virtually eliminating their payments if I go on SS while drawing long term disability? I paid part of this insurance premium while working my current job.

  • I have a 401 that has grown to about 250,000 and have it invested in what I consider high risk. I monitor it daily and have seen trends where it might grow by 8,000 today to loseaving me a 4,000 gain. then it moght fall 8 4,000 next week fall 8,000 only to rebound by 15,000 within a week. Should I leave this senario alone as long as I realize the risks and it is gaining over the long run?
    I am 61, will be 62 soon and am on disability. I am not planning on drawing from this 401 for several more years. I feel I will have enough income from long term disability, ssa disability and my company pension to live comfortability on till I reach full retirement age.

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