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  1. 1. Lesson #2 – Preparing a Financial Plan Financial Planning Spreadsheets FOR USE WITH MICROSOFT OFFICE OR EXCEL 2007, 2003, XP (2002), or 2000 © - U.S. Version Toll Free Order Desk:1-800-694-9996 Pg 1 of 33 MONEY MINDERS SOFTWARE Software for the Financial Professional Copyright © 2008 - Money Minders Software Click the arrows to advance to the next slide or go back to the previous one.
  2. 2. A good financial plan starts with detailed information at the time the clients complete the Questionnaire. Before you do any of the reporting. Pg 2 of 33 Lesson #2 – Preparing a Financial Plan
  3. 3. Pg 3 of 33 This page from the client questionnaire when completed will show you which area of the financial plan the clients want you to focus on. Lesson #2 – Preparing a Financial Plan
  4. 4. Basic Client Information When you open the program you will be prompted to start a new financial plan by the screen shown below. Clicking “Yes” to this option will open the Client Data screen. If you are doing a number of reports for a client you may want to enter their basic information here. All data entered here is linked into all the worksheets. When you open each report this data will appear on every report. You may also access this screen from the “Options” tab in the Financial Planning Spreadsheets © main menu. Pg 4 of 33 To start a new financial plan it is best to use the client data input menu shown below. Lesson #2 – Preparing a Financial Plan This field is automatically calculated from Date of Birth information above.
  5. 5. The Financial Planning Spreadsheets © main menu will appear as shown below: Next: If you are doing a complete financial plan you may want to start with the “Net Worth Statement” worksheet, as this is the benchmark from which to measure future progress. Pg 5 of 33 Lesson #2 – Preparing a Financial Plan Double Clicking on any of the report titles will open a copy of the template in Excel.
  6. 6. The Financial Planning Categories The items listed on the Financial Planning Spreadsheets © menu system in bold are the minimum required for most financial plans. Pg 6 of 33 Lesson #2 – Preparing a Financial Plan
  7. 7. Net Worth Statement This is the basic tool for beginning a financial plan. It also provides the benchmark from which to monitor progress in the future. It has been designed to be very detailed so as to serve as a memory jogger. When the statement looks the way you want, print it out for the final presentation binder and then save it. This also saves the Net Worth Chart as it is in the same file. Pg 7 of 33 You can copy this information from the client questionnaire. When information is transferred to the spreadsheet it will show the totals and the percentage in each category as well as the ratio of assets to liabilities. Lesson #2 – Preparing a Financial Plan
  8. 8. Chart for - Net Worth Statement Pg 8 of 33 This chart is updated from any changes to the Net Worth Statement. You can change any of the display, or colors on any chart as they are not protected. Lesson #2 – Preparing a Financial Plan
  9. 9. Cash Flow Analysis The annual cash flow report is designed to examine expenditures by category, whereas the monthly cash flow report is designed to look at individual expenses as well as debt reduction. To remove any amount just type 0 in the cell or hit the spacebar. Entering an amount in the monthly column will calculate the annual amount and enter it in the annual column. Data is entered only once. An entry on the annual cash flow worksheet repeats automatically into the monthly worksheet for more detailed analysis. Planning Opportunities Pg 9 of 33 Lesson #2 – Preparing a Financial Plan
  10. 10. Clearing Sample Data Clicking on this button on your excel menu will clear all the default data entries on the page. Or, you can just type over the default entries. Pg 10 of 33 Every file has a guide page to help you understand the use of these worksheets. Comments flags appear at most important data entry points to guide you in putting in the correct data. They are displayed with a red triangle. Lesson #2 – Preparing a Financial Plan
  11. 11. Cash Flow Projections Chart Planning Opportunities Pg 11 of 33 Lesson #2 – Preparing a Financial Plan
  12. 12. Pg 12 of 33 For a more detailed study of a clients cash flow or debt management you can use this monthly worksheet. Income & Expense descriptions can all be changed to suit your situation. Labels for each Month can be changed so that you can start from any month of the year. Changing the numbers in any month will repeat that entry on the next months column until the end of the year. By default the entry shown is 1/12 th of amount on Annual Cash Flow page. Lesson #2 – Preparing a Financial Plan
  13. 13. Risk Tolerances Questionnaire The purpose of this report is to create an “Investor Profile” which accurately identifies the client(s) attitudes for risk. The client’s answers provide a total score, which automatically identifies one of six asset allocations for them. This will then give a recommended portfolio mix based on their Investor Profile. You can adjust the recommended allocations for each asset class, or adjust the formulas to reflect your own opinion. These questions also appear in the financial planning questionnaire to be completed by the client. Just enter an “X” beside the clients answer to prepare the portfolio recommendations. Pg 13 of 33 Before you can enter any financial planning recommendations you need to understand the clients tolerances for risk. Lesson #2 – Preparing a Financial Plan
  14. 14. Pg 14 of 33 For a broad overview of the clients existing holdings open the analysis file on the “Allocation” worksheet. For a detailed analysis of the client(s) existing holdings open the portfolio file which consists of four different worksheets for all types of investments. Lesson #2 – Preparing a Financial Plan
  15. 15. Summary of Investment Fund Holdings This report allows you to report to the client an overview of all their holdings. It allows you to track their ACB, Rate of Return and unrealized gain, etc. The page is summarized by type of investment, asset class category and owner. This report can be printed on its own or as part of the set. Up to 28 investments can be listed on each page. There are four worksheets to cover all types of investments. Pg 15 of 33 For a detailed analysis of the client(s) portfolio just complete the blue cells on this page and the other investment pages. Lesson #2 – Preparing a Financial Plan
  16. 16. Summary of Investments This report shows the summary of your clients guaranteed investments, fund holdings, other securities, & insurance contracts. All the portfolio information in the individual spreadsheets from this file are summarized on this single report. This file also contains a cover page for your presentation. This template is the summary page from the portfolio file. It provides a client with a detailed statement of their holdings in greater detail than is usually provided by their financial institution Pg 16 of 33 This report also links to the Allocation worksheet to compare holdings to the clients stated risk tolerances. Lesson #2 – Preparing a Financial Plan
  17. 17. Asset Allocation Goals The purpose of this report is to automate the process of rebalancing the client(s) portfolio. It works in conjunction with our “Risk Tolerance Questionnaire” to identify the “Investor Profile” then compares the asset allocation recommendation to the actual client holdings. The holdings are picked up from the Portfolio Summary spreadsheet. (See Previous Page) The holdings can be entered directly if you have not used the portfolio report. As soon as the worksheet has been opened, the recommended re-balancing of the portfolio is calculated showing the percentage and dollar amount to be re-balanced. There are a total of 15 asset classes amongst the four major asset categories. The asset classes are also adjustable. Pg 17 of 33 Lesson #2 – Preparing a Financial Plan
  18. 18. Estate Capital Needs Analysis The “Estate Capital Needs Analysis” spreadsheet calculates the amount of capital required to provide for final expenses, clearance of the estate and income for the survivor(s). The rate of continuation of income for survivors can be input along with an assumed inflation rate and is automatically calculated. A re-adjustment period of higher income can also be calculated. This spreadsheet can calculate for either, or both spouses. Benefits received from the Social Security for Widows & Orphans are factored into the calculations. The spreadsheet calculates the income requirements to age 65 by default, unless you type in some other age. If you have a solid retirement plan for the client you may not need a provision for income after age 65. Pg 18 of 33 An important part of any financial plan is to see if the family is protected in the event of the death of either spouse. Lesson #2 – Preparing a Financial Plan
  19. 19. Estate Capital Needs Analysis Chart Pg 19 of 33 When you save the file the chart is saved with it. Lesson #2 – Preparing a Financial Plan
  20. 20. Important Pg 20 of 33 Any disability that causes a loss of income could ruin a financial plan quickly. This risk has to be considered for the plan to be complete. Disability Needs Analysis Lesson #2 – Preparing a Financial Plan
  21. 21. Enter your clients information into all of the blue or plum colored cells. This data comes from the data file or you can enter it directly here. This retirement plan works because there is sufficient capital to last until youngest is 99. Pg 21 of 33 This is one of our most popular templates . By simply filling in the assumptions you can quickly produce a very detailed retirement plan and a report your client can quickly understand. Lesson #2 – Preparing a Financial Plan
  22. 22. Retirement age of 56 (2 years earlier) Produces a shortage of capital at age 83. Some of the variables have to change, i.e. savings, rate of return or ? Pg 22 of 33 Lesson #2 – Preparing a Financial Plan
  23. 23. Pg 23 of 33 Every report contains notes and additional compliance information and your personalized imprint. Any client can understand this plan. Age 84 of spouse - capital used up. Lesson #2 – Preparing a Financial Plan
  24. 24. All charts can be customized to your preferences. Chart colors are chosen specifically to print in color and/or black and white. To view the chart select “Joint Chart” at the bottom tab on your screen. When the report page is the way you want it go to the chart page and print it as well. Pg 24 of 33 Changes to the report assumptions will automatically update the report and its chart. Lesson #2 – Preparing a Financial Plan
  25. 25. Education Savings This spreadsheet has been popular for showing the effects of a Education Savings Plan (ESP). The spreadsheet allows various payment streams and provides for the capital to be withdrawn at any time you select to illustrate. Capital can be illustrated as being withdrawn independent of the earnings withdrawal. By using three different rates of return assumptions, you can determine the type of portfolio required to meet the education funding goals. When you have the Education plan looking the way you want, print it then save it. This will save the chart in your client folder as well. Pg 25 of 33 Planning for post secondary education is an important part of financial planning for clients as well as grandparents. This is one of 6 available for education planning templates in this file. Lesson #2 – Preparing a Financial Plan
  26. 26. Registered Education Savings Plan Chart Pg 26 of 33 The entire chart can be edited by you. This chart is automatically generated from the report page. Lesson #2 – Preparing a Financial Plan
  27. 27. Effect of Recommendations On Tax Payable This helps the client see the value of your services and the bottom line advantage to them of your recommendations. Pg 27 of 33 A good financial plan will by necessity have a detailed tax analysis and tax planning section. You can do a very detailed tax analysis on one page. Lesson #2 – Preparing a Financial Plan
  28. 28. Additional worksheets will probably be required depending on the needs of the client or your recommendations. Just continue the same way with each situation until your plan is complete. Pg 28 of 33 Lesson #2 – Preparing a Financial Plan
  29. 29. Pg 29 of 33 Most of our financial plans consist of a 3-5 page written document in Microsoft Word with the reports from this program as schedules attached to the reports behind this cover page. Additional generic recommendations are included on the next page for detailed review by the clients. Lesson #2 – Preparing a Financial Plan
  30. 30. Financial Planning Recommendations This is a list of recommendations to be used for a complete financial planning client. It is also meant to serve as a memory jogger of areas that you may have forgotten to think about exploring with your client. The list can be prioritized in order of importance. You can choose from over 50 recommendations and you can print and prioritize up to 40 recommendations onto one page. You can also enter your own recommendations and change the existing ones. Whatever you type on the “Basic” worksheet shows up on this personalized sheet in order of priority that you assign. Pg 30 of 33 Lesson #2 – Preparing a Financial Plan
  31. 31. Pg 31 of 33 Lesson #2 – Preparing a Financial Plan Writing Your Financial Planning Recommendations Writing a good financial plan requires education training and experience. Financial planning software can crunch the numbers. It will provide forecasting of the clients situation as well as illustrate the effect over time of your recommendations. What software cannot do is interpret the numbers to come up with a game plan that is suited to the client’s situation, attitudes and philosophy. It cannot decide on priorities, or allocation of available resources, as this is up to you and the client to decide, based on your recommendations. The length of the plan document will of course vary with the complexity of the client’s situation. Generally we find that there are four to five pages of personalized text, followed by supporting schedules from the software. These schedules provide the documentation and the audit trail for the client. They are the basis of your recommendations. After you have done a few plans in your own style of writing, you can make the text into a template file to be used as the basis of all future plans. You will find that many of the detailed explanations you write can be used in other plans. By cutting and pasting from previous plans you can quickly put together the written recommendations. The success of your financial plans will depend on your ability to put the best interest of the client’s ahead of your own and your empathy for the client’s situation. MONEY MINDERS SOFTWARE Software for the Financial Professional
  32. 32. Pg 32 of 33 Before you finish your plan review the client Questionnaire to see if anything has been overlooked. If you are doing a comprehensive financial plan use the checklist provided. Lesson #2 – Preparing a Financial Plan Part of the Checklist for a Comprehensive Financial Plan
  33. 33. Financial Planning Spreadsheets © - U.S Version Thank you for viewing our Preparing a Financial Plan slide show. For more detailed information on using the product please open the owners manual. From the main menu click on “Help” then “Financial Planning Spreadsheets Manual…” This will open the manual for viewing, or printing. To get a free demo of this product click here . To order this software click here . Toll Free Order Desk:1-800-694-9996 Pg 33 of 33 MONEY MINDERS SOFTWARE Software for the Financial Professional Copyright © 2008 - Money Minders Software Version 2.0 – Updated April-09-2008