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Money Matters

Joshua Bradburn
Vice President at Charles Schwab in Santa Monica.

How Financial Planning Can Help You Achieve Your Wealth Goals
(Continued from Monthly Columns)

My use of the word “wealth” often throws people off, and I get a response that goes something like this: “Well, I don’t have wealth, but I’m saving for retirement, and invest here and there.…”

According to a recent Schwab survey of 1,000 Los Angeles residents, locals are split about what wealth means, with some with some describing wealth as a specific sum of money and others describing it more as a state of mind. According to the findings, the top five definitions of wealth among 1,000 Angelenos are:
• Being able to afford anything they want (26 percent)
• Having a lot of money
(25 percent)
• Enjoying life’s experiences
(23 percent)
• Living stress-free and having peace of mind
(16 percent)
• Financial security and stability
(11 percent)

When asked how much money is required to be considered “wealthy” in Los Angeles, L.A. area residents say it’s an average of $2.6 million, or more than 30 times the actual median net worth of U.S. households according to the U.S. Census Bureau.¹

And, for most Angelenos, that feels out of reach. While 43 percent of those surveyed say they are already millionaires or believe they can reach that level, the majority (57 percent) say they don’t have any hope. In my conversations with investors, I encourage them to think about the money they have now—whether that’s $5,000 in a brokerage account or $500,000 in a 401(k)—as wealth that deserves and requires their attention. Too often, I find that investors dismiss that $5,000, and don’t consider how financial planning and frequent engagement can improve their confidence and overall financial outcomes over time.

To help track how well Americans across the wealth spectrum are planning, managing, and engaging with their wealth, Schwab developed the Modern Wealth Index. The Index, which is grounded in Schwab’s Investing Principles, assesses Americans across four factors: 1) goal setting and financial planning, 2) saving and investing, 3) staying on track and 4) confidence in reaching financial goals. On a scale of 1-100, Angelenos received a Modern Wealth Index score of 53, slightly above the average national score of 49, but an indication that there is plenty of room to improve.

According to the Index, financial planning is a critical factor – those who put pen to paper with written financial plans are more confident, more engaged with their wealth, and demonstrate more positive saving and investing behaviors, so that’s where L.A. residents should focus most. In fact, just 28 percent of Angelenos say they have a financial plan in writing, according to the survey.

A comprehensive financial plan is your road map to help you stay on track and manage wealth, as your life evolves and finances become more complicated. While it can seem daunting to get a plan down on paper, talking through your goals with a financial professional can help ease a lot of that anxiety. While some investors prefer to walk into a branch and have a planning conversation with a financial consultant in person, technological innovations are also making comprehensive financial planning available to investors from the comfort of their homes. A plan forces you to develop a realistic perspective on where you are, where you want to go, and how to make the best use of your resources to get there – regardless of whether you have a little or a lot.

Joshua Bradburn is a financial consultant at the Charles Schwab branch in Santa Monica. He has over nine years of experience helping clients achieve their financial goals. Contact him at the branch during business hours (Mon-Fri 8:00 a.m. - 5:00 p.m.) at 826 Wilshire Blvd., Santa Monica, phone 310-752-9956. Or follow him on Twitter at @JoshBradburnCS. *Some content provided here has been compiled from previously published articles authored by various parties at Schwab. Charles Schwab & Co., Inc., Member SIPC.

1Smith, Adam, R. Chenevert, J. Eggleston. Improvements to Measuring Net Worth of Households: 2013. Current Population Reports P70BR-143. U.S. Census Bureau, Washington, DC. 2017.

About the survey and Modern Wealth Index methodology-The Modern Wealth Index, developed in partnership with Koski Research and the Schwab Center for Financial Research, is based on Schwab’s Investing Principles and composed of 60 financial behaviors and attitudes – each assigned a varying amount of points depending on their importance. The Index broadly assesses Americans across four factors: 1) goal setting and financial planning, 2) saving and investing, 3) staying on track, and 4) confidence in reaching financial goals. Based on the total number of points received, respondents were indexed on a 1-100 scale for each of the four factors and an overall score. The online survey was conducted by Koski Research from April 12 to April 20, 2017, among 1,000 Americans aged 21 to 75 and 500 Los Angeles area residents. Quotas were set so that the sample is as demographically representative as possible. The margin of error for the total survey sample is three percentage points.

Disclosures: Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. Koski Research is not affiliated with the Charles Schwab Corporation or its affiliates. More information is available at www.schwab.com and www.aboutschwab.com. Investment Products: Not FDIC Insured • No Bank Guarantee • May Lose Value. (0717-763N)



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