Exit planning: 28 Questions to Help You Build Your Financial Plan.

This is the second of a three-part miniseries in this larger series on exit planning.

1. Written Personal Plan

2. Personal Financial Plan

3. Estate and Tax Plan

Yesterday, we gave you 7 steps to develop your Written Personal Plan. Today, we are going to give you 28 questions to ask yourself as you build a financial plan. Many of these questions are taken straight from our financial planning meetings with our clients. Before we dive in, I want to acknowledge that some of these questions are going to sound like they belong in the Written Personal Plan… and they do. Just know that both of these steps are inseparable: The Financial Plan serves the Written Personal Plan. The saying applies: “If you don't know where you are going, any road will get you there.”

Without further delay, here are several of the questions you should be asking as you build your Personal Financial Plan. We’ve broken them out into 4 categories, and they’re not exhaustive by any stretch. But if you think about these and discuss with your spouse before a planning meeting, it’ll be a much better meeting:

I. Basic Data

1. How much are you earning in income right now, and from which sources? How will this change in the future, if at all?
   

2. Emergency fund: do you have an emergency fund in place? If so, how much do you have saved up?
   

3. Debt: what outstanding debts do you have, including mortgages, student loans, and credit card debt? What are the interest rates and repayment terms?
   

4. Insurance coverage: what types of insurance policies do you have (for example, life, health, disability, long term care, etc.)?
   

5. How much are you saving every year?

   1. …In retirement accounts?

   2. …In brokerage accounts?

   3. …In savings accounts?
      

6. What are the balances inside your various investment and retirement accounts? Your cash accounts?
   

7. What is your estimated value of your business? What is your share of it? Are you planning to sell it in the future? To whom? What level of exit planning have you engaged in thus far?

II. Risk and Time Horizon

1. On a scale of one to 10, 10 being the most aggressive and one being the most conservative, how aggressively would you like to invest? Do you know what level still allows you to sleep well at night? How does this differ from your spouse?
   

2. Do you know how much investment risk you need to take to achieve your goals?
   

3. When was the time that you lost what seemed like to you a large sum of money in the market? How did you feel? How did you respond?
   

4. If an investment that you had committed to for 10 years dropped by 20% in the first year, how would you feel? What would you do?
   

5. What do you know about your investment wiring? Are you analytical? Do you want the big picture? Do you like to dabble in DIY investing? Are you a perfectionist?
   

6. Which is more impactful to you: the pleasure of investment gains or the pain of investment losses?
   

7. Behavioral biases: are you aware of any behavioral biases that may influence your investment decision, such as overconfidence or recency bias?
   

8. Tax considerations: have you considered tax efficient strategies for maximizing returns and minimizing liabilities?
   

9. Estate planning: have you established an estate plan, including wills, trust, powers of attorney, and Trusted Contacts? Are your beneficiaries up to date on your personal and retirement accounts?
   

10. How soon do you need or want to spend the dollars inside each investment account? How flexible is that timeframe?
    

11. Do you have your expenditures broken out by goal? E.g.: Annual retirement expenses, vehicle upgrades every 3 years, grandkid trips every other year, significant charitable contributions after age 70…

III. Vision

1. What is your answer to The 3-Year Question? (credit again here to Dan Sullivan. See the prior post on Written Personal Plan)

   1. What are the biggest dangers that you want to mitigate against?

   2. What are the biggest opportunities that you would like to capture?

   3. What strengths can you build on to achieve your three-year vision?
      

2. What is the purpose of your wealth? Why are you doing what you are doing?
   

3. Charitable goals: what charitable causes or organizations are important to you? How do you want to incorporate charitable giving into your financial plan and legacy?
   

4. Lifestyle considerations: how do you envision your ideal lifestyle in retirement or financial independence? What activities, hobbies, or travel plans do you hope to pursue?
   

5. What does financial independence look like for you?
   

6. Will you retire completely?
   

7. Will you begin a new career?
   

8. Of all of the goals that you have outlined thus far, how would you prioritize them?

IV. Action

1. Have you identified and prioritized the major personal financial de-risking initiatives you need to accomplish? If not, identify them, prioritize action, assign a WHO to lead each one, and set a date to report back on progress or completion.
   

2. Have you engaged the rising generation about your wealth? Do they understand their role in the family legacy? If not, discuss with your financial advisor when and how to begin the family legacy conversation, and who needs to be involved when.
   

3. Do you know your Wealth Gap? (Credit to Chris Snider in Walking to Destiny, this is the difference between assets needed to generate income for financial independence and the assets you have, not including the sale of your business). If not, solve for your Wealth Gap with your financial advisor.
   

4. Tax optimization: have you explored strategies for minimizing taxes such as tax loss harvesting, Roth conversions, or charitable giving? If not, discuss with your advisor and create a plan.

Again, these are by no means exhaustive, and on the flip side, you don't have to have all of these answered before you were planning meeting. But it certainly does help to have an idea what to expect when you come in to meet with your advisor to create a plan.

The great artist Michelangelo is credited as saying “I saw the Angel in the marble, and carved until I set him free.” We know our clients already have a vision inside their heads and hearts about their future. We bring these questions to help them set the vision free.

We hope this has been helpful to you, and if you know of others that would benefit from reading this or other articles relating to Exit Planning, we invite you to share these with them.

With that, we thank you, and we will see you tomorrow!

Any opinions are those of The Weddle Team and not necessarily those of Raymond James Financial Services, Inc., or of Raymond James. The information contained in this presentation does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.