Financial advisors are often miscast as soothsayers of investment market direction. Many advisors find themselves in the trap of wanting to appear confident and knowledgeable about what might happen next while knowing with great certainty that they can't control or predict the short-term directions in the market.

The most important dynamic in a successful advisor-client relationship is establishing a mutual understanding of what the advisor and client can and cannot control in their work together. Many investors get led astray, believing that advisors can see into the future. For this reason, advisors need to take control of the financial planning process and demonstrate that we can help our clients prepare for the future, even if we are uncertain what might happen down the road.

To a large degree, investors can control more than they think. For instance, plenty of consideration should be given to what they choose to spend now, what they decide to save for the future, timing of life-changing events, how much risk they welcome in investing and future goals such as charitable giving or a legacy for family. Advisors can help investors understand these five factors in order to achieve what is most important to them in their financial plan. Consider:

1. The daily grind (and cost) of their current lifestyle.

Advisors need to start with what most people don't particularly enjoy doing, and that's looking carefully at what they are spending now. Start by tallying expenses for a monthly basis, including both fixed types of expenses (utilities, groceries, loan payments, property tax, insurance) and variable expenses (gifts, entertainment, traveling). A majority of a financial plan needs to be based on these figures, as they are used to determine which of those expenses will change once retirement begins.

2. Saving for a raining day and a sunny retirement.

These specific questions must be addressed first:

Is the investor saving enough now to make their goals attainable?
Do they have a steady, predictable cash flow?
Are there additional expenses that may arise in retirement?
Are there other expenses that might go away in retirement?
If they are already retired, would they like to spend more for things such as traveling?

After the above are considered and answered, it is time to measure whether the client's goals are realistic or not. Once a client has a strong understanding of how much they spend now and how much, ideally, they would like to spend in retirement, a better long-term picture starts to materialize. Simply put, if they don't know where they are now, it's going to be nearly impossible to figure out where they want to be and how to get there during retirement.

3. The timing of discretionary events.
Many investors lack a planned calendar for discretionary events based on financial capabilities. Vacations are planned around holidays or during summer; car purchases are planned when the newest models are released; flat-screen TV purchases take place near the sports world's biggest events. Investors need to focus on opportunities that make sense for them-not what's good for manufacturers. Sales and gimmicks offered in the current recession are not the way for investors to save. By helping map out a timeline of discretionary purchases based on financial ability including income, bonuses and tax returns, a client can clearly see how they can control their assets and improve spending decisions.

4. Risk and reward-or penalty.
As we already know, a more aggressive portfolio brings the potential for higher returns, but it also may force the investor to miss some goals he or she has always dreamed of.

When taking personal aspirations into account, an investor, with an advisor's guidance, will have to build a portfolio that diversifies assets across a variety of financial instruments, in both post-tax and tax-deferred investment accounts that presents an asset allocation that will allow the investor to have a balance of the growth they hope to achieve while taking a conservative position in protecting capital.

Investors must be aware of their intrinsic ability to accept risk. Strategic planning, education and proactive communication between advisor and client create the best recipe to keep a portfolio in-line with its long-term goals, objectives and risk parameters.

5. To leave a legacy.
A large portion of individuals want to leave a legacy, while others want to live out their days without worry, travel and live life in a luxurious fashion. For those that want to gift a portion of their assets to family, friends or charitable institutions, specific steps must be taken early on. To get there, though, it is paramount to keep in mind the investor's present-day financial situation, how it can change over years and their financial aspirations for when they are gone. During retirement it is important to review and update an estate plan, wills and trust arrangements. These documents, in the event of a disability or a death, will protect the investor and the goals they have planned to achieve for their own retirement and their legacy.

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