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Objective: The statement of net worth is a snapshot of your overall financial well being at a given point in time. Among other things, the statement of net worth helps you understand how assets are spread between spouses, for estate planning purposes. Since clients normally want advice on all their assets, not just investments, the statement of net worth is among the tools we use to help define overall risk segmentation for your overall investment portfolio including accounts held with other managers.
Perhaps the most important function of the statement of net worth is that it is a guidepost to help you see your progress in reaching your financial goals. As you progress in the planning process, regular updates of your statement of net worth will serve as a history of your successes in achieving your goals.
The Process: We ask for you to gather information about all of your existing assets and liabilities - from your employer 401(k) plan to your existing mortgage and car payments. As long as we have complete and up-to-date information, the statement of net worth can be completed after our first meeting. From the creation of this statement, we'll develop an overall asset allocation to determine areas that might require additional diversification and/or changes in your plan. For our retainer clients, we will generally update your net worth statement quarterly.
Importance: Your statement of net worth, while relatively simple to complete, is the basis for many additional analyses. From tax and estate planning to asset allocation and retirement/survivorship planning, the net worth statement provides information that can help you make sound choices based on accurate information. A summary of your net worth, while constantly changing, can also provide important information about your overall financial situation, how your assets are held, the relationship of your assets to liabilities and might even point out opportunities for more effective use of debt.
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| Sandy Hook Lighthouse, Sandy Hook NJ |
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