The term financial planning is often used casually. And the term financial advisor also applies to insurance agents, stockbrokers, representatives of investment advisors, and those with advanced designations such as Certified Financial Professional.

That said, some financial planners will provide, what I would call, “an assessment that doesn’t have to be in your best interest” as a suitability assessment, rather than a “best interest” assessment. But the best interests assessment really only applies to proper product selling.

Although financial planning is often synonymous with or included in investments, the term financial planning may be incidental to investments, but does not stand alone.

What financial planning can and should do for you

The following categories show many of the financial issues that can be resolved through a financial planning relationship with a Certified Financial Planner™, Certified Retirement Planning Advisor and Certified Investment Trustee®.

Cash flow/budgeting

  • Creation of personal or professional budget
  • Provide advice and analysis on cash flow management, budgeting and emergency fund planning
  • Explain the different components of cash flow (income, taxes, expenses)
  • Savings strategies
  • Debt management strategies
  • Personal fundraising strategies
  • Personal Statement of Financial Position and Cash Flow Statement Analysis

Personal financial planning

  • Create a Personal Financial Position (Net Worth) Statement and a Cash Flow Statement
  • Determine the financial situation of clients by analyzing special needs, investments, taxation, benefits, etc.
  • Analysis of major purchase objectives and financing options
  • Advice during a lifestyle change or a major life event (Marriage, divorce, children, work, education)
  • Provide financial advice/planning for special circumstances including death, disability, job loss, windfall, divorce, etc.
  • Discussion of various mortgage options/real estate purchases
  • Importance of savings (average dollar cost, compound interest)
  • Net present value calculations include analysis of time value, future value, present value, present value of an annuity due
  • Training on mortgage options and financing analysis
  • Stock option planning
  • Risk management and insurance planning
  • Medical health planning and planning
  • Disability planning
  • Pre-retirement death insurance (economic value replacement)
  • Duration of long-term care/premium coverage
  • Umbrella liability

Tax planning

  • Tax Reduction Strategies
  • Tax avoidance strategies
  • Tax deferral strategies
  • Investment with tax management
  • General Discussion of Deductions and Recognition of Income
  • Answer questions about investment tax issues
  • Discuss the state of personal financial situation
  • Analyze personal cash flow statement
  • Analyze and explain the taxation of life insurance and annuity products

Retirement planning – Early retirement

  • Social Security and Medicare health care cost planning
  • Analysis of retirement needs
  • Savings planning to help clients reach their goal
  • 401(K), cash balance, etc. contribution limit planning
  • Pension plan analysis and education
  • Beneficiary Designation Planning
  • Analysis of employer plans versus self-directed plans
  • Act as a liaison coordinating pension service providers, product sponsors or vendors
  • Education on withdrawal strategies and the sequence of performance risks
  • Benefits of Lump Sum vs. Annuity Pension Analysis
  • Roth Conversion Analysis

Retirement planning – Post-retirement

  • Minimum required distribution or 72t calculations and analyzes
  • Analysis of the sustainable expenditure rate
  • Needs, Wants and Wants Income Planning Strategies and Implementation
  • Beneficiary Designation Planning

Education and college planning

  • College Costs and Inflation Analysis
  • College Cost Reduction Strategies
  • Development of financing strategies
  • Provide asset ownership guidelines
  • Discussion of qualified tuition/education savings plans
  • Financial Aid Strategies

Investment planning/asset allocation

  • Risk and reward (risk tolerance analysis)
  • Risk tolerance/risk capacity/needs tolerance assessment
  • Risk Education and Rewards
  • Asset allocation analysis
  • Socially responsible investment Integration of investments
  • Diversification analysis
  • Analysis and research of individual securities
  • Development of the investment policy statement
  • Investment with tax management

Estate planning

  • General estate planning and gifting strategies
  • General estate tax planning and education of trusts and estates General planning of trusts and education – types, features and taxation
  • Explanation of estate planning structures/documents – wills, powers of attorney, trusts, etc.
  • Estate Cash Planning Sources
  • Title deed planning and property titling
  • Discuss the impact of account and trust beneficiary designations

Business financial planning

  • Cash flow analysis
  • retirement planning
  • Succession planning
  • Benefits planning
  • Business Use of Insurance Analytics

Expect more from a financial planning relationship

Financial planning by a Board-certified professional, Certified Financial Planner™ is relatively rare. Moreover, CFP® professionals who offer independent financial planning are even rarer. Financial planning professionals should be able to provide a return on investment on their financial planning advice.