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What Everyone Should Know About the Standard Financial Planning Process

What Everyone Should Know About the Standard Financial Planning Process

December 22, 2016

The financial services world can be intimidating and confusing for a lot of people, and not everyone understands the differences between stockbrokers, financial planners, investment managers, and so on. What can complicate things further is when financial planning firms don’t adhere to fiduciary responsibilities or over-promise.

Not every advisor believes in transparency, but I do, which is why I think it’s important for everyone to understand how many traditional financial planning scenarios play themselves out — and the inherent flaws that people may not see.

The Standard Process

Many advisors follow a traditional financial planning process. They ask you to identify your future financial needs. This may include retirement, paying for your children’s education, and saving for a big purchase or vacation. The advisor then provides various strategies or products that, on paper, can meet those goals.

Next, you’ll be asked to make some assumptions about how much income you will need in retirement to maintain your desired lifestyle. You may also have to guess how long you anticipate living, medical expenses, expected investment returns, future tax rates, inflation, emergency expenses, and more.

Once you have guessed or predicted answers to these and other questions, your advisor believes he or she has all the numbers needed to punch into the magic financial calculator, use a few software programs, and voila! Your financial plan is ready.

The Problems with This Approach

To someone unfamiliar with the financial services world, this may seem like a good approach. However, there are more than a few flaws. First of all, we can’t predict the future the past doesn’t always dictate future results. We can never know with certainty what the markets will do, what things will cost in the future, what taxes will be, how long we’ll live, and how healthy we’ll remain.

We may be able to guess, but if we’re wrong, those theories were useless and may have caused more harm than good. Making assumptions about the future is not the way to build your financial confidence. In some cases, I’ve reviewed plans clients had prepared by another advisor and those plans allowed little room for life’s surprises. When pursuing a financial goal, it’s easy to put on blinders and forget to prepare for an unexpected road bump, such as the loss of a job, a lawsuit, a natural disaster, an exciting investment opportunity, a wedding, a divorce, or a long-term care situation. All of these possibilities — among others — must be considered, and your financial plan must be resilient enough to withstand the impact of these events.

A More Strategic Approach

I believe there’s another, more appropriate and logical approach advisors should take when helping people prepare for their financial future: utilize sound economic principles instead of guesswork.

Put a Protection Plan in Place

The most important step in planning your financial future is to secure what you have with proper insurance protection. Insurance can play a powerful role in your financial strategies for safeguarding what you’ve worked so hard to build and provide for your family. As a Chartered Life Underwriter®, I have advanced training and knowledge in life insurance and estate planning. I help my clients obtain maximum protection for their assets and income throughout their life.

Increase Liquidity

Once a protection plan is in place, I work with my clients on increasing their savings by as much as 20% per year. Saving more can help you avoid relying on volatile market returns that may not ever materialize. One helpful way to improve your saving capabilities is to adhere to a budget. I help clients develop a budget that provides you the freedom to enjoy life but instills the discipline necessary to keep you on track.

In addition to saving more, it’s important to maintain adequate liquidity and eliminate debt. Investments are important, but you need enough liquidity to respond to life and seize opportunities. I don’t drag your wealth through time with a log of debt attached to it. I help you restructure your debt so that it balances healthily with your earning potential.  

Minimize Taxes and Risk

With all of my clients, I seek tax-advantaged financial strategies designed to reduce your tax burden and help your money work more efficiently.

Along with minimizing taxes, it’s important to reduce risk. Especially when you’re nearing retirement, it’s risky to chase or assume you’ll gain high returns. Rather than pursue a high rate of return on your investments, I seek lower-risk financial strategies to help ensure that your financial future can be realized.

These various elements integrate with each other to make up a comprehensive plan that’s flexible and regularly updated.

Working with Me

When working with me, you can be sure that I’ll never ask you to peer into a crystal ball and predict the future, and I’ll never pretend to know what the future holds. Instead, I’ll work with you to find the real answers to the questions you have been asking.

If you’re interested in learning more about my process or how to plan for your future when the future is uncertain, I’d be happy to meet with you in-person or over the phone to discuss. You can reach me by phone at (612) 746-2272 or by email at

About Ernest Draper

Ernest Draper is a financial advisor with more than 18 years of experience in the financial services industry. Specializing in innovative investment strategies and wealth preservation products, he works with affluent professionals, executives, and business owners. Along with his many years of experience as an advisor, Ernest is also certified as a Chartered Life Underwriter®, Chartered Financial Consultant®, Chartered Advisor for Senior Living®, and CERTIFIED FINANCIAL PLANNER™ professional. With these designations, Ernest has the advanced training and knowledge to understand complex planning strategies and techniques facing many successful people and their families. Based in Minneapolis, he is licensed to work with clients in Minnesota, Illinois, Wisconsin, Maryland, Washington D.C., Missouri, Texas, and Connecticut. To learn more, connect with Ernest on LinkedIn, email him at, or call his office at (612) 746-2272.