5 Ways Financial Planning Should Pay for Itself

Maura Schauss |

By Maura C. Schauss, CFP® at Washington Wealth Advisors

There is a common misconception that financial planning is too expensive and that the value you gain from a financial plan doesn’t align with the price you pay. As a CERTIFIED FINANCIAL PLANNER™ professional with over 20 years of helping clients strengthen their financial futures, I can tell you that this belief couldn’t be further from the truth.

In fact, working with a financial planner can help save clients’ money by eliminating unnecessary expenses and redirecting those funds toward long-term financial goals. Any amount spent on implementing healthy financial habits today will more than pay for itself in the long run. There are many tangible ways a strong financial plan can add value to the lives of clients, including financial gain, risk reduction, improved well-being, and changes in behavior toward the achievement of long-term financial goals.

If you’re on the fence about working with an advisor, here are 5 ways financial planning can pay for itself.

1 | Tax Benefits

One of the most obvious ways financial planning can pay for itself is by uncovering ways to save on your income taxes. This can come in the form of identifying, tracking, and claiming various tax deductions and credits, as well as structuring your assets in a tax-efficient way. Financial planners can also work side by side with your CPA or other tax professional to ensure your overall financial plan is fully aligned with your tax plan.

Tax-loss harvesting is another strategy that can save clients money. By strategically selling some investments at a loss, you are able to offset the gains on other investments, which can potentially reduce your taxable income.

2 | Investment Planning Benefits

On the investment side, financial planning can help clients identify cost-effective investments and set up a systematic savings plan. Not only that, but clients with excess cash can put those funds to work in risk-adjusted investments to take advantage of compound interest over time.

A clear example of the cost-saving benefits of financial planning is reducing or eliminating the expensive fees associated with mutual funds. Mutual funds are one of the most popular ways to invest in a large variety of assets with relative ease. But they usually charge much higher fees than other investment options, and these fees can have a big effect on returns over time.

What many clients don’t realize is that other investments are available, offering the same exposure to a wide range of investment options, but with significantly less fees. These can be  much more cost-effective and can help boost your returns over time.

In addition to reducing fees, financial planning can help you reduce risk through proper diversification and rebalancing. By ensuring your portfolio has the right asset allocation for your situation, you can minimize the impact that any one single losing investment can have on your overall portfolio performance.

Rebalancing is also a key factor in keeping your portfolio safe. It’s not enough to create proper diversification and just walk away. You need to regularly analyze your portfolio to ensure it lines up with your risk level and that you haven’t become too reliant on any one asset category.

3| Retirement Planning Benefits

Planning for retirement is one of the hallmark benefits of working with a financial planner. Beyond simply saving for the future, financial planning also provides several opportunities to save money. Here are just a few examples:

Tax-Advantaged Retirement Savings

If you’re in a high tax bracket, being able to save for retirement with pre-tax dollars is a great advantage because pre-tax contributions ultimately reduce the amount of taxes you owe. This strategy could save you thousands of dollars in taxes each year. The earlier you start, the more you’ll save over the course of your career.

Deciding When to Take Social Security

Deciding when to claim Social Security benefits can greatly impact the amount you receive and ultimately affect the longevity of your retirement plan. You can begin taking benefits as soon as age 62, but your monthly benefit will be lower than if you waited until age 70. Depending on your family history, current health, and other sources of retirement, it may make more sense for you to take the benefits early or later. An experienced financial planner can help you maximize your benefits based on your unique situation.

Withdrawal Strategies

When it comes to withdrawing from your retirement accounts, how you take your distributions can make all the difference. Each retirement asset (employer-sponsored accounts, Social Security, traditional IRAs, etc.) has different tax characteristics. Creating a withdrawal strategy can help lower your tax burden by structuring withdrawals from each income source in a tax-efficient way.

To properly implement these strategies and more, a long-term understanding of your full financial picture is required. Putting off financial planning can leave you stuck with a huge tax bill that could have been avoided.

4 | Insurance and Estate Planning Benefits

Insurance premiums are another area where financial planners can have a big impact. It’s not uncommon for us to save a client money by reviewing their insurance coverages. You may find that you’re either under- or over-insured, and any cost savings can be compounded over time through wise investment decisions and healthy financial habits.

Comprehensive estate planning also provides an opportunity for financial planners to save clients money. Through proper titling, beneficiary designations, and estate planning strategies like charitable gifting and trusts, financial planners can help clients avoid the hassle and expense of probate and reduce potential estate taxes. Not only can this benefit the client by safeguarding their accumulated wealth, but it can also benefit the client’s beneficiaries by providing a seamless transition of wealth.

5| Overall Well-Being Enhancement

Can you can spend today knowing you are on track for your financial goals? Do you feel 100% confident about the myriad of financial choices you make day in and day out? Have you encountered more complexity as your assets have grown? Partnering with a financial professional can help alleviate the stress and anxiety that comes from trying to figure out your finances and improve your overall well-being. At Washington Wealth Advisors, we call that Financial Peace of Mind.

Think about all the time you spend worrying about finances and whether you’re saving enough money. Are those thoughts preventing you from making great memories and actually living your life? For many of our clients, the answer is yes. But it doesn’t have to be that way.

Financial planning can help alleviate the stress that comes from not knowing where you stand or how to achieve your goals. It can provide clarity by defining a path from point A to point B, and allowing you to get the most out of your life along the way.

Take the Next Step

Washington Wealth Advisors is a trusted financial partner, offering independent financial advice tailored to clients’ unique goals. We use the latest technological tools and active investment management to keep clients on track toward achieving those goals and our comprehensive financial planning process can provide value to our clients for years to come.

If you’re ready to take the next step in your financial planning journey, we would love to hear from you! Call our office at 703.584.2700 or email clientservices@washingtonwealthadv.com or schedule a meeting with us to get started today.

 

IMPORTANT WASHINGTON WEALTH ADVISORS DISCLOSURE INFORMATION

 

ABOUT WASHINGTON WEALTH ADVISORS

Washington Wealth Advisors is a fee-only registered investment advisory firm serving busy families, executives, women building wealth, and small business owners. We provide Wealth Advisory Services—financial planning coupled with asset management—guided by a personalized investment strategy based on each client’s unique goals. Our fiduciary approach, independent advice, and proactive investment management help to support our clients’ overall financial peace of mind.