Continuing our discussion on the Sixth Critical Report, Progress Reports are a vital key in effectively assisting your Ideal Client in reaching their financial goals. There are many issues and questions to be resolved before this particular report may be created, such as:
 
Should the values, which represent "funds required to accomplish a goal," be displayed in:

• future dollars
• future dollars calculated back to present value

or …?

Should "funds required to accomplish a goal" be displayed as:

• before taxes or
• net after taxes?
• How should goals representing future streams of "income" be represented? (EXAMPLE: For my Financial Independence Goal I want $25,000 per month, net after taxes.)

The simple response to all of these and other questions is: The issues are for your Financial Planning Subject Matter Expert to resolve.

The key result, regardless of how these issues are resolved, is: These significant assumptions must be made clear to your Ideal Client, when presented (a simple disclosure statement or "assumptions page").

Further, Trusted Advisors are encouraged to clarify Client Goals by distinguishing between two important goal types, and outlining in detail, to ensure the best results.

(These additional steps will further establish you as a Trusted Advisor, and highlight the expertise of your Best-in-Class team.)

1. Fixed Goals
These goals, located on The Financial Road Map®, represent an amount of money needed on a future date(s) to fund a stated goal.

EXAMPLE GOAL:

European Vacation
June 18, 2014
$28,000

2. Goals Representing Future Streams of "Income"
These goals, located on The Financial Road Map®, represent future streams of "income," which are simply desired distributions which may be comprised of gains, income, or both.

EXAMPLE GOAL:

Financial Independence
June 18, 2019
$25,000 / month (net after taxes)

Your Best-in-Class Financial Planning Subject Matter Expert will have no difficulty resolving all issues regarding how to create The Goal Progress Report described here, and we hesitate to offer guidance.  That being said, experience shows that the following clarifications may help serve you and your financial planning expert.

Financial Planning Note #1:
Presenting "funds required to accomplish a goal" makes little sense to be represented on The Goal Progress Report as the "present value" of the goal, unless the "present value" is "calculated back" from the "future value" needed to fund the goal; assuming it will then, in the "real world," inflate by the rate of return assumed for the growth assets earmarked that goal until the goal-date.

Financial Planning Note #2:
An alternative planning approach from the one above would be to display the values presenting "funds required to accomplish a goal" as the "future value" only on The Goal Progress Report.

The Trusted Advisor Toolkit™ Note:
For your information, and that of your team, the approach taught on The Trusted Advisor Toolkit™ follows the logic of "Financial Planning Note #2" (above); the safer, but tougher to achieve approach. However, your financial planning Subject Matter Expert is given the option to override this "default" approach presented and follow another assumption.