On The Money

Cash flow based financial planning by William “Bill” Baxter, CFP, general manager of Paladin Partners LLC

The old saying goes, “The devil is in the details.” 

This could not be more true than in financial planning – especially for complex situations involving business owners, corporate execs, other professionals and even retirees. 

A majority of advisory firms today have chosen to use goal-based financial planning for their clients. This is a useful approach for families with limited complexity, outstanding discipline and an ability to predict the future well – none of which are applicable for many.

Let’s look at how one might use the goal-based approach. You begin with a set of simple facts (e.g. current asset level), assumptions (e.g. inflation) and desired outcome (e.g. cash flow desired during retirement). You then solve for either the required return or required monthly savings.

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