What is Financial Planning?

Caitlin Joyce |

As advisors, we are sometimes asked plainly: what is financial planning? Over the years, the answer to that question has changed. Traditionally, financial planning has been the practice of investment management. This version of financial planning typically follows more conventional methods, focusing on basic principles like budgeting, savings, and investing in standard vehicles such as stocks, bonds, and mutual funds. The work done with a financial planner was usually limited to the investment portfolio with the end goal of steady, predictable returns over time. The focus of traditional financial planning was confined to the financial metrics of a client, such as income, expenses, assets, liabilities, investment returns, and so on.


                   While the quantitative side of financial planning is important and a fundamental component when it comes to overall financial health, it is not the only consideration. The financial planning profession has recognized this over time and has expanded to encompass a broader range of client factors beyond the numbers. According to the CFP Board, financial planning “involves looking at a client's entire financial picture and advising them on how to achieve their short- and long-term financial goals.”1 This modern definition of financial planning is sometimes referred to as comprehensive financial planning due to the holistic nature of the profession to set it apart from the traditional approach. Comprehensive financial planning increasingly emphasizes clients’ unique circumstances, beliefs, family dynamics, and life goals to create thorough financial plans. This shift involves deep conversations to uncover clients’ attitudes towards risk, life stages, career aspirations, health concerns, and even social and environmental values. This approach allows financial advisors and planners to craft strategies that align with not only financial objectives but also ambitions and values.


                   As this new era of financial planning goes beyond the investment portfolio, it incorporates other areas of financial planning that can be just as important to the broader picture; this includes retirement, estate, insurance, tax, and education planning.  All aspects work together to provide a roadmap of financial health and a financial future for clients and their families. These factors rarely work independently from each other.  For advisor-client relationships to be their most successful, all areas of the clients’ financial circumstances must be considered. For example, tax-efficient management on investment gains can improve overall performance, appropriate estate planning arrangements can protect assets and their values that are part of the estate and passed to beneficiaries, proper education funding with the


consideration of investment options and tax implications can improve the availability of education resources in the future, and so on. These planning aspects are interconnected, and decisions made in one area can greatly impact other areas of the financial position. Focusing only on the investment side of clients’ financial pictures can leave significant exposure in other areas leading to damage that would have otherwise been avoided had all factors been considered.


                   Understanding the relationships between the different areas of financial planning is crucial for overall financial success. At WRFA, we create personalized strategies to achieve your unique goals by covering all critical aspects for a secure financial future. Our expertise and holistic approach provide ever-changing roadmaps that bring structure and peace of mind while guiding you and your family toward long-term financial success.


Disclosure: The information provided in this blog post is for educational and informational purposes only and should not be construed as financial advice. While we strive to present accurate and up-to-date information, the financial, tax, and legal landscape is subject to change, and individual circumstances vary. Readers are encouraged to consult with a qualified financial advisor or professional before making any financial decisions or implementing strategies discussed in this post. Our firm does not guarantee the accuracy, completeness, or suitability of the information provided, and we disclaim any liability for any direct or indirect damages arising from the use of this information. Past performance is not indicative of future results. Any investment involves risk, and individuals should carefully consider their financial situation and risk tolerance before making any investment decisions.