Menu Close

Avoiding Financial Ruin

In 1999, half of all bankruptcies in the United States were initiated following a health crisis. That means hundreds of thousands of families were suddenly faced with the very real prospect of total financial ruin. Can you imagine having a loved one diagnosed with cancer and having to worry about your finances instead of helping that person get better?

“Studies show three out of every five Americans over 65 will need long-term care while, at the same time, we have no comprehensive long-term care system in our nation today. Since healthcare insurance does not cover long-term care, families are forced to either pay out-of-pocket for long-term care or spend down their assets to qualify for Medicaid,” said Senator John Breaux (D-La.). While health emergencies are just one example of an event that can cause devastating financial loss, not being properly prepared in any number of areas could spell doom for both yourself and your family. It used to be that you had to rely on several different financial professionals to ensure you had made all necessary preparations, but now you can arm yourself with an unbiased and powerful weapon in your fight against financial ruin.

Confronting the financial planning process has never been easy. From a certified public accountant and tax attorney to an estate planning attorney, life insurance agent, health insurance agent, investment advisor, and banker, you’ll need about seven different professionals to properly diagnose and develop a complete financial plan! But when was the last time you had a combined meeting with all of these specialists? Further, each of these professionals has a particular set of skills and each has a tendency to focus on the areas of their expertise. An accountant is not expected to initiate proper life insurance planning, while an estate planning attorney would make your estate more tax friendly but may not address investment planning issues.  Unfortunately, this can leave gaping holes in your overall financial plan and endanger any of the good planning you’ve already accomplished.

The first step to avoiding this potential pitfall is to get a snapshot of your financial plan and determine what areas may need further review. Of course, that isn’t exactly a simple request, since many of the tools financial services companies offer are either too specific to a particular type of planning or are skewed to sell the company’s products. But we’re going to highlight F&H’s worthy solution, which is totally unbiased–so you don’t have to be concerned that you’re being subtly pushed in one direction or another.

The reality that many of the nation’s consumers are not properly prepared for retirement necessitated the creation of a tool which would examine a person’s entire financial plan and expose any potential problems–we call it the Financial Health Surveyâ„¢. The Financial Health Survey consists of 55 questions that address nine different financial planning areas. These questions aren’t difficult to answer and ask such things as “Are more than 50% of your net assets liquid,” and “Do you tap into the principal of your investments to sustain your standard of living?” F&H gives the survey-taker three answer choices: yes, no, and maybe. The “maybe” option allows for those instances when you’re the slightest bit unsure about your plan. Once you’ve completed the Survey, the answers are fed into the Financial Health Diagnostic system. The system analyzes the information collected and then generates a clear and concise assessment of your current financial health via a colorful graph. From this graph you’ll be able to determine what areas may need improvement and what areas may not need to be addressed.

So what does it cover? Take a look at the following list:

  1. Safety/Risk
  2. Debt exposure
  3. Financial planning attitude
  4. Liquidity
  5. Income
  6. Asset accumulation
  7. Tax protection
  8. Health care
  9. Estate preservation

Please note that the Survey is designed to deliver a basic view of your financial plan and does not provide a specific solution–that’s the job of a licensed financial professional. And just as an X-Ray needs to be reviewed by a doctor, a Financial Health Survey needs to be analyzed by a financial professional. The main purpose of the Survey is to help families pinpoint the areas of their finances that need attention and the areas where they have planned appropriately.

Remember that financial planning done right involves having a plan and a set of goals–the Survey can help you ensure you’re following a plan and meeting those objectives. The Institute recommends that you take a Survey once a year, to reflect any changes in your plan. In order to make sure the Financial Health Survey remains completely unbiased, there are a few important rules pertaining to its administration:

  • The Financial Health Survey must be provided free of charge.
  • The Financial Health Survey must be verified and delivered by a licensed financial professional who is an F&H member (head to www.fhri.org to learn more about the membership program).
  • The information in the Financial Health Survey is kept confidential at all times by F&H and its members.

Why should you consider getting a Survey? With so many obstacles on the road to retirement, it’s important that you take the necessary steps to avoid financial ruin. Used properly, the Financial Health Survey could potentially save you and your family thousands of dollars…And provide you with financial peace of mind. In other words, it’s definitely worth twenty minutes of your time!