I have been posting recently about goals-based planning. It may be hard to visualize what is unique about this kind of planning. So here is a sample plan from R-MAP Planner, the tool I developed for goals-based planning, so you can see how this kind of planning works. I use the plan template as the framework both for the client plan and for the planning process itself, since it clarifies what I need to know to create the plan.

I create the plan document from a PowerPoint master. I make the screenshots from R-MAP with SnagIt, drop them into the plan, edit the text to highlight the salient issues for the household, swap slides in and out as appropriate (ie, survivor income risk, company stock over-exposure, etc), save as a PDF, and the plan is ready to go. The PowerPoint master is included with the R-MAP download.

The plan starts with a summary cash flow, then detailed income and expense cash flows. This leads to fundedness—understanding how well the household is funded to meet its goals—and the amount and percentage of earnings, if any, needed to be saved annually for catch-up in order to cover the income floor at retirement.

The balance sheet then provides the Upside/Floor/Longevity/Reserves Retirement Policy Allocation. The plan goes through each allocation, detailing the purpose of the allocation and the recommended implementation for the household. Household risk exposures are reviewed and the Reserves allocation is confirmed. Altogether, the plan is the household Retirement Policy Statement, or if retirement seems too distant, the household Lifetime Financial Policy Statement.

Take a look and let me know what you think. I learn every time I go through the process and am constantly improving the tool, the process, and the plan.

–Michael Lonier, RMA℠