Posted By: CFP&WM On: Jul 8th, 2009 In: Financial planning General info My soap box

What is Financial Planning?

Financial planning is the process of helping you to obtain your goals in life by making better decisions in the management of your finances. Everyone has different goals therefore everyone’s financial plan will differ. However, the process of financial planning is always the same and will include:

1. Defining your goals both short-term and long-term

2. Gathering the necessary information as the basis of the plan

3. Analyzing and evaluating your current status

4. Developing recommendations and alternatives to reach your goals

5. Implementing the recommendations in your financial plan

6. Monitoring and reevaluating your status and goals over time

Your personal financial plan should be tailored to your unique set of circumstances and goals. It should contain a checklist of the recommendations needed to help you reach those goals.

Your financial plan should contain both “defensive elements” such as estate planning and risk mitigation as well as “offensive elements” such as investment analysis and recommendations, retirement planning projections, education funding options, tax strategies as well as basic cash flow analysis.

Your financial plan should be in a written format, which will allow you to go back and reference it over time. Having a written document also makes it clearer with less likelihood of misunderstandings.

If you would like to have a better understanding of the areas that should be addressed in your plan go to and complete the Financial Satisfaction Survey. It is free and can be very enlightening. It has been said that” it’s what you don’t know that can hurt you most”. The survey is a good way of finding out the areas where you may need help.

The two important points to remember about obtaining a financial plan are:

1. Always go to a Certified Financial Planner practitioner ™. The CFP Board of Standards assures the public that the certified planner has met minimum education requirements, passed a comprehensive test, meets ethics standards, meets continuing education standards and has had at least three years of experience. There is no other certification that ensures the public of this level of the planner’s competency.

2. Never go to a financial planner who sells insurance or investments. Whenever there is a sale of a product there is a commission paid which creates a conflict of interest between what is best for the buyer vs. what is best for the seller. Regardless of how ethical the salesperson seems you never know if the sales recommendation is truly best for you or is best for the salesman. By going to a “ fee-only” planner (do not sell products) the recommendations will always be 100% objective since the planner has no vested interest in the recommendations because there is no benefit to the planner with the sale of a product. Numerous publications recommend that you should go to the following sites to find a list of “fee only” planners in your area. or

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