Sedona Arizona

What is financial planning?

Here’s the definition of financial planning, as expressed in the CFP Board’s updated Code and Standards published in October 2019:

Financial Planning is a collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances.

Do the words “collaborative”, “maximize”, and “life goals”stand out to you? That’s what financial planning is all about.

What financial planning is NOT about is gaining permission to spend money. Nor is it something only wealthy people do.

These are unfortunate misunderstandings of what financial planning is and who it benefits. Those working to build wealth, as well as those who are already higher net worth can benefit from sound financial planning.

When approached correctly, financial planning is comprehensive, professional wealth management.

Another misconception is what type of advisors are financial planners. Job titles and professional designations in the financial industry are quite confusing. Yet, there is an important distinction between investment-only advice and financial planning.

What is financial planning?

Financial planning is the hub of comprehensive wealth management

What is financial planning?

There are seven key areas of planning we place our focus; at a high level, they are:

  1. Net worth. This is your personal balance sheet of assets and liabilities. See how your wealth evolves as you buy and sell and/or use assets and liabilities.
  2. Cash flow. A snapshot of money in and money out over a period of time. Here we can plan the timing of income, expenses, savings, and investing.
  3. Risk planning. Also known as insurance or protection planning. Your total risk exposure is identified in areas such as: home and auto, life, disability, health, long-term care, and general liability. For business owners, we’ll review risks from business activities and professional errors/omissions.
  4. Investment planning. We establish your investment strategy, your personal risk number, investment time frame, and liquidity needs. Your investment strategy is built to integrate with your financial planning objectives.
  5. Tax planning. Review potential tax strategies based on current and future projected income, deductions, investments, asset disposition, and cash movements.
  6. Retirement planning. Define what retirement means to you. How do you envision your purpose and identity once you are no longer working for a living? How much do you expect to spend on a monthly basis in retirement? How much do you need to save before retiring? At what age you plan to retire? When should you take Social Security benefits?
  7. Estate planning. Decide and document how you would like to protect and pass on your financial legacy. Who are the people and/or organizations you’d like to benefit? Get everything in place to avoid probate and disputes to protect your assets and those you love.

Financial planning is really about understanding your values, your financial purpose, and what you want for yourself. Clarity around what’s most important to you brings empowerment in your financial choices.

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Author: Dale Shafer II, CFP®, APMA®, CDFA®

The National Association of Personal Financial Advisors
The Society of Advice

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