What is Financial Planning? | Rodgers & Associates

What is Financial Planning?

Many people overlook the power of financial planning and confuse it with investment advice. So, what is Financial Planning? In the simplest form, it is the coordi­nation and imple­men­tation of strategies for several financial disci­plines that includes invest­ments, retirement, insurance, estate and tax planning.

According to the CFP Board, The Standards of Profes­sional Conduct (Standards) define financial planning as “the process of deter­mining whether and how an individual can meet life goals through the proper management of financial resources. Financial planning integrates the financial planning process with the financial planning subject areas.”

Some of the important value lies in the coordi­nation and imple­men­tation of strategies. Imple­men­tation has often been the Achilles heel of financial planning. It is one thing to make a recom­men­dation, it is another to implement the recom­men­dation. We have seen prospects who have a well-designed estate plan, but the benefi­ciaries were not named correctly, or the Revocable Trust was not funded. Without imple­men­tation, all the planning in the world doesn’t work.

Consumers often think one of their profes­sionals, whether it be their CPA, attorney, insurance or investment adviser, is looking at the big picture, when in many cases they are not. One of the reasons your profes­sional team may not be looking at these things is that they are not getting compen­sated to see the big picture. In most cases the big picture and the imple­men­tation are up to you.

How Financial Planners Add Value

Financial planners, especially those who have earned the CFP® desig­nation, are trained to look at the big picture. It is important that somebody is in the driver’s seat and doing this job. If not, you could miss many valuable oppor­tu­nities.

Certified Financial Planner® Profes­sionals who work as Regis­tered Investment Advisors (RIA) are governed by the Investment Adviser’s Act of 1940. That requires them to be fiduciaries. This fiduciary standard is a higher bar than the suitability require­ments of investment brokers. Compen­sation from fees can eliminate many conflicts of interest that are inherit with selling products.  The combi­nation of being paid by a fee, unrelated to product sales, and the Fiduciary standard pave the way for a CFP® to look at your big picture to truly add value to your financial life.

Don’t get fooled into thinking all financial advice is the same. Do your research to enable you to under­stand the differ­ences. If you have any questions, call us at 717–560-3800. We will be happy to provide additional infor­mation and answers.