Give your financial self a chance at success by capturing the moment and overcoming procrastination. The simple tools and tips in this article will provide you the needed insight and digital framework needed to start developing the perfect financial plan.
Create ‘Financial Filing Cabinet’
A master filing system seems like a pretty obvious yet essential starting point. Clean up your ‘junk drawer’ mentality of financial management and figure out what’s required to be remembered, readily accessible, and for what accounts you simply just need login access.
A financial filing cabinet
The best organizational systems will have secure and swift access to frequently used documents and are accessible on an ongoing basis with as little time as possible to source new information. A sound system will essentially eliminate the continuous gathering of items such as monthly investment statements. If you need an account statement, you can always log in and access it. Instead of keeping it in the folder, just delete it and log in later if you need a new report.
Another tip is to place a .txt file with a list of the URLs of banks for all your accounts and how an approved user can securely gain access via your chosen password manager. Anyone who may need to pick the file up in your footsteps will greatly appreciate you providing a simplified roadmap and framework to obtain passwords securely.
Everyone should have an organized system for login information. A good password management system will reduce risk by utilizing Two-Factor Authentication, random password generation, encrypted storage, and printable key-code vault access.
Additionally, information such as investment statements are secured behind a gated infrastructure. This works great for items such as bank accounts and investment statements that are always going out of date.
Recommendation: Top Non-Traditional Financial Planning Considerations
However, for certain items having an actual policy on hand is a good idea as it tends not to change as often and can be harder to obtain.
For your Car, Home, and Umbrella Insurance, you’ll undoubtedly want to have the complete and most updated physical policy on hand. Why? It’s no secret that many car and home insurance companies will not make detailed policy documents readily accessible online should a claim occur. While a “declaration page” may be readily available, many insurance carriers will require policy documents to be mailed directly to you, often delaying insight into what’s exactly covered by a potential claim. When evaluating a claim, it’s good to have those policy details readily accessible and right when you need them.
Life, Disability, and Long-Term care policies are also good to have on hand, but I find those need to be reviewed and updated less frequently. It’s a good idea for clients to understand the dynamics of how these policies work as opposed to trying to understand them ‘in the moment.’
Using An Outline as a Financial Plan’s Framework
The financial plan itself can benefit from having a basic framework. Think of the plan as a house. Before putting up the drapes and painting the walls, you must pour the concrete and put up the framing. The best way to help a client work through a plan is by using an outline. The outline acts as a framework to avoid getting into the weeds too quickly and going off track. Additional benefits include organization & conciseness.
An outline also establishes a good maintenance process. Often just a client’s focus is needed to see the big picture. An outline helps maintain focus on what matters most and what areas to spend time on and explore further.
Finally, it’s much easier to communicate with a workflow of information over a page or two than with a 50-page report. The key is a system that is both usable and simple.
Take advantage of the simplistic framework to quickly and easily remind you of upkeep. Log notes about potential changes, updates, or questions. Then print out when connecting with the various professionals.
Not Going Overboard on Data Retention
A financial file should not be a ‘junk drawer’. Having unnecessary or outdated data is a privacy risk. Understand what you should have on hand and what information is likely not needed, and what information can be readily pulled from the web. When organizing your files, the focus should be on what is actually required to have immediately on hand and where and how to readily and easily find those items not on hand in a secure manner. The process should be gathering → updating → archiving → purging.
I try NOT to retain sensitive client documents. It’s not a big deal to make a call or upload something securely.
Detail & Completeness
Using an outline is a much easier process to review for gaping holes. You can look at the topics and subtopics to ensure you have covered everything. Remember, a financial plan that has the possibility of multiple events to derailing planning is not a financial plan.
An example might be the upgrades and adjustments to personal possessions which were not initially communicated to the insurance company. A detailed financial plan file will have an ongoing list of items and their approximate value for reference in the event of a loss. The metadata in the file will track when the file was created, and you should update the file with detail plus any adjustments over time. Uploading a video walkthrough of the house once every few years is a simple way to archive your valued life possessions for the off chance a claim surfaces.