Building wealth takes years of hard work – and a plan. Financial planning is the foundation for long-term financial success. It can provide the clarity and strategy you need to preserve and grow your wealth. Whether you are preparing for retirement, assessing how to manage an inheritance, or ensuring your assets are properly invested, a financial plan helps provide confidence in your future.

Hancock Whitney understands that individuals and families with significant wealth face unique financial challenges and opportunities. This article explores how the first and most crucial step in the financial planning process —assessing your current financial situation—sets the stage for a sound financial future.

Five Steps to the Financial Planning Process

While every financial journey is unique, most comprehensive plans follow these five essential steps:  

Step 1: Assess Your Current Finances

The first and most critical step in financial planning is understanding where you stand today. This involves getting organized - taking a detailed inventory of your income, expenses, assets, liabilities, and overall financial health. Without a clear and accurate picture of where you stand today, strategic decision-making becomes difficult, and opportunities can be missed. 

We dig into this step and outline why it is so important later in this article. 

Step 2: Define Your Financial and Lifestyle Goals

Once you have a firm understanding of your current finances, the next step is to establish both lifestyle and financial goals. You may be focused on securing a comfortable retirement, passing wealth to the next generation, or funding an heir’s education or a combination of these objectives. Having well-defined goals supports the creation of a financial plan, which is the roadmap of your financial strategy.

Step 3: Work with a Trusted Advisor 

A financial advisor can help refine your strategy and identify wealth-building or wealth-preservation opportunities as part of the financial planning process. Higher-net-worth individuals often require sophisticated tax strategies, estate planning and investment approaches—areas where professional guidance is invaluable. 

Step 4: Implement Your Financial Plan

Once your financial goals are defined and your strategy is in place in the form of a thorough, documented financial plan, execution is key. This might involve reallocating investment portfolios, establishing trusts as part of your estate planning process, or optimizing tax strategies. Taking action ensures your financial plan moves from concept to reality.

Step 5: Revisit and Adjust Your Financial Plan Regularly

Financial planning is not static. As your circumstances change—whether through life events, market conditions, or shifts in personal goals—it is important to work with your advisor to revisit your financial plan regularly. This ensures your plan remains aligned with your objectives while maximizing opportunities.

If you are an affluent individual who feels ready to learn more about financial planning, you can read more insights in our recent article, The Ultimate Guide to High Net Worth Financial Planning.

What Makes Step 1 in the Financial Planning Process So Important?

This article focuses on Step 1 of the financial planning process—assessing your current finances. This step is the cornerstone of effective planning. Without this critical, first step, you risk making decisions based on incomplete or inaccurate information, which can lead to poor decision-making and missed opportunities.

A thorough financial assessment allows you to: 
•    Establish a clear understanding of where your finances stand. 
•    Identify potential cash flow gaps that need to be addressed.
•    Determine your savings and investment opportunities. 
•    Uncover unnecessary expenses or potential tax liabilities.
•    Assess your risk tolerance and adjust investment strategies accordingly.

How to Assess Your Current Financial Position

Understanding how to assess your finances is the first step in the financial planning process. When evaluating your current financial situation, you will need to gather information and documentation:

• Income Sources: List all revenue streams, including business income, investment returns, real estate earnings, and other assets. Understanding your inflows helps determine liquidity and cash flow sustainability.
• Expenses: Understand both fixed and discretionary expense to identify where adjustments may be beneficial. High-net-worth individuals often benefit from structing spending in tax-efficient ways which a financial advisor can help recommend during the third and fourth steps of the financial planning process.
• Assets: Catalog all your holdings—real estate, investment portfolios including non-retirement and retirement accounts, and business interests. This provides a comprehensive view of your wealth.
• Liabilities: Understand your obligations, including mortgages, business loans, and tax liabilities. Managing debt strategically can enhance cash flow and optimize financial positioning.
• Investment Strategy: Compile documentation about your current investment holdings to help your advisor ensure it aligns with your goals and risk tolerance as part of step 3 of the financial planning process.
• Insurance Documents:  Assemble your insurance documents to support an assessment of potential risks and vulnerabilities.
• Estate Planning Documents: Gather any existing estate planning documents, such as wills, trusts, and powers of attorney, so you and your advisor can assess them as part of later steps in the financial planning process. Effective estate planning protects your wealth and is essential for a seamless transfer to future generations.

Going through this process can not only kick-start the process of creating a financial plan, it can also improve your physical and mental health. Worrying about finances is a leading cause of stress and anxiety. Embarking on the 5-step process of creating a financial plan can help you feel more confident and secure in your financial future. To learn more, read our recent blog What Is Financial Wellness - and Why Does It Matter?

Your Advisor Needs a Clear Picture of Your Finances

Financial planning can be complex, particularly for individuals with significant wealth. A financial advisor brings expertise in financial planning, investment management, estate planning, tax optimization and risk management. To provide the guidance you need, your advisor needs to be fully informed about your current financial situation. That’s why gathering the documents outlined above as the first step in the financial planning process is so crucial.

When you work with Hancock Whitney to create a financial plan, we will take the time to:
•    Tailor recommendations to your specific needs and goals
•    Identify potential inefficiencies in your financial structure
•    Implement risk management solutions to protect and preserve wealth

You can learn more on our approach to helping clients in this situation, see Financial & Retirement Planning | Hancock Whitney Bank.  

Financial Planning is the Key to Growing Your Wealth

This article helps you understand why the first step in the financial planning process —assessing your current financial position—is so key to unlocking the full potential of your wealth. At Hancock Whitney, we understand the complexities and challenges that come with growing and maintaining your wealth, and we are committed to helping individuals and families create financial plans that support both short-term and long-term goals.

By taking a structured, strategic approach, we can help you protect your wealth, capitalize on opportunities, and build a lasting financial legacy. If you are ready to take that first step, our team is here to guide you. 

Contact an advisor today to begin your financial planning journey with confidence.

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. 

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation. 

Hancock Whitney Bank offers investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank is a wholly owned subsidiary of Hancock Whitney Corporation.

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