From the State of the Union to the State of You

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Approximately 50 million people will tune in to this year's State of the Union address. This annual review of the body politic, mandated by the Constitution, began with our nation's first president and has been emulated by leaders of smaller jurisdictions as well. Many governors deliver a yearly "State of the State" or "State of the Commonwealth" speech, while the similarly-intended version for mayors is aptly called "The State of the City." Clearly these reviews are important tools of governance and executive management at any level.

But what about households or even at the level of the individual? How many people do an annual analysis of where they stand and where they are going? Those working with a CFP® professional probably do. While the analysis is generally called a financial plan rather than a "State of Me," its purpose and benefits are very much the same as those of President Obama and his 43 predecessors.

The State of the Union will take President Obama an hour or more to deliver, but actually sets out an agenda that will take the entire year, if not longer, to execute. The same is true for comprehensive planning – it takes time, long-term monitoring and adjustment. To this end, CFP Board is launching a "12 for '12 Approach to Financial Confidence" to help consumers prepare their own executive annual assessment of where they are financially, where they would like to be in the future, and how they plan to get there.

For the month of January, we will be looking at the first step in the evaluation of anyone's finances: deciding whether you need help.

The objectivity and expertise of a financial professional is called for in the following situations:

• When you are facing a major life crisis or transition – divorce, death of a spouse or family member, loss of a job. At these stressful moments, emotions can cloud your judgment. You want an expert – a CFP® professional – who practices by a fiduciary standard, putting your interests first ahead of his or her own.


• When you realize that you do not know what you do not know. Securities markets, financial products and tax laws are constantly and rapidly changing, and without a professional who keeps current with these changes, you can easily miss financial opportunities or be exposed to significant risk.


• When a complete review of your financial circumstances is needed. You may, for instance, know you need to save more but are uncertain as to how or where to begin. A CFP® professional will look at your cash flow, tax liabilities and debt, insurance needs and retirement planning to help you find the most effective strategies.

In the coming months, we'll focus on other important areas of your financial life, including: establishing realistic goals, tax planning, emergency and risk management, investing, retirement, debt management and estate planning.

When all is said and done, there is perhaps one important difference between the State of the Union address and a personal financial plan. When you share your plan with your constituents – namely your family and friends, you can expect the "applause" to be unanimous. Financial confidence and direction is something most everyone can rally around.

Eleanor Blayney, CFP®
CFP Board's Consumer Advocate
consumeradvocate@CFPBoard.org

January 24, 2012

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