1. Financial Planning Financial Planning An Introduction to the Financial Planning Process Conducted by: Lawrence W Wiswall Jr. TCS Financial Services, Inc.

2. What is Financial Planning? Personal Financial planning is the organization of an individuals financial and personal statistics for the purpose of maximizing assets and effectively meeting near and long term goals. Accomplished through Cash Flow maximization by investment asset allocation

3. 6 Steps of the Planning Process Assets – Liabilities = Net Worth Determine type of assets held III. Set Objectives IV. Practice Risk Management V. Establish a model (Allocation) II. Know what you can afford to invest I. Learn what your net worth is: VI. Find assistance if needed

4. I. Determining your Net Worth Need to determine your current status and where you are by assessing what you own and what you owe (Assets & Liabilities) Needs to be updated at least on a yearly basis Shows your position, a personal balance sheet

5. II. Know what you can afford to invest Establish a three month process 1 st Month - Develop your spending pattern 2 nd Month - Realign spending to match savings & investment goals 3 rd Month - Make sure revised spending habits are working Build cash reserve for emergencies of 3 to 6 months of after tax income Once cash reserve met, begin funding for goals

6. III. Set your Objectives Determine investment goals both short and long term:  Child’s education, Purchase a new home, Retirement Goal should consist of:  Timeframe in which to acquire fund  Funds needed to accomplish goal  What you want to accomplish Set savings plan to accomplish goal

7. IV. Practice Risk Management “ Don’t risk more than you can afford to lose. But, don’t pay to insure what you can afford to risk” Professor Robert Mehr, Principles of Insurance 2. Increase deductibles for risk you can afford to self insure 1. Reduce or avoid obvious hazards- seatbelts, smoke detectors, personal health etc. 3. Make sure you are insured for Health, Life, Disability, LTC, Auto, Home and Excess Liability (Umbrella) Policies where needed Good Financial management protects from perils that can drain your assets

8. V. Establish a model (Asset Allocation) Allocation is a personal preference that is based on: Goals and time frame to accomplish them Risk vs. Reward Tolerance Age / Family situation Your present situation Allocation then allocated to items determined by their risk

9. Most Risky Least Risky Cash, Savings, Treasury Bills, CD’s, Money Market Funds Annuities, Life Insurance Common Stock, Corporate Bonds, Mutual Funds Options Commodities, Art, Raw Land, Gems Options and Speculative Items Municipal Bonds, Income Limited Partnerships

10. VI. Find Assistance Legal Assistance Accounting / Banking Assistance Financial Planning Assistance Broker Assistance If needed find an expert in the appropriate area for assistance Get additional information through books, seminars, or further education

11. Key Areas of Financial Planning Investment Planning Income Tax Planning Insurance Planning Retirement Planning Estate Planning Cash Management Education Planning

12. Cash Management The establishment of budgetary controls over expenditures Scheduling of major cash commitments for future years Elimination of negative monthly cash flow & expansion of daily standard of living The evaluation of current debt levels

13. Investment Planning Types of Investment Vehicles Bonds Income Producing (REIT’s, Utilities, Pipelines) Mutual Funds Equities (Stocks) Asset Allocation Investment Strategies Taxation and Tax Efficient Investments Risk vs. Return

14. Income Tax Planning Tax Management Techniques Deductions Other Tax Info Tax Calculations for Individuals Income Tax on Trusts and Estates

15. Education Planning Projecting costs & methods of paying for schooling Developing plan to accumulate the funds needed Utilizing tax advantaged strategies Determine additional ways to make up any shortfalls, student loans etc.

16. Insurance Planning A form of risk management Why risk Management?

17. Liquidity Crisis – forced sale of assets at sacrificed prices Death - Loss of family earnings Disability – Loss or reduction of family earnings Sickness – Unlimited medical expense, Loss of earnings Property Loss (Theft, Fire, etc.) - loss of assets Personal Liability Case – Legal expense & possible court judgments For life’s unexpected events

18. Insurance Planning A form of risk management Types of Insurance Auto Home Health Long Term Care (LTC) Life Insurance Disability Insurance Why risk Management?

19. Retirement Planning Forecast income requirements during retirement years Determine extent to which net worth can support these requirements Learn benefits & limits of available resources provided by social security Determine sources for preparing, IRA’s qualified retirement plans, annuities, etc.

20. Estate Planning Business & Property Transfers Marital and Charitable deduction vehicles Federal Estate Tax liability calculation Documents of Transfer – Wills & Trusts Gifts and federal gift taxation

21. Sample Asset Allocation