About Financial Planning

Helping People Take Control Of Their Finances

Financial Planning Standards Board defines financial planning as:

   a process of developing strategies to help people manage their financial affairs to meet life goals  

Life goals can include buying a home, saving for your child’s education or planning for retirement.

The Financial Planning Process

FPSB’s Financial Planning Process consists of six steps that financial planning professionals use to consider all aspects of a client’s financial situation when formulating financial planning strategies and making recommendations.

The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. Personal financial planning provides direction and meaning to your financial decisions.

It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

The Financial Planning Process consists of the following six steps:

The personal financial planner should clearly explain and document the services that he or she will provide to you and define both his/her and your responsibilities during the personal financial planning engagement. The personal financial planner should explain fully how he or she will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.
The personal financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The personal financial planner should gather all the necessary documents before giving you the advice you need.
The personal financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
The personal financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.
You and the personal financial planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your coach, coordinating the process with you and other professionals such as attorneys, accountants or stockbrokers.
You and the personal financial planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he or she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

The Value of Financial Planning

As more and more people become responsible for their long-term financial well-being, recent research by Financial Planning Standards Board Ireland finds that most consumers feel challenged by their finances.

However, consumers who work with financial professionals – particularly those who work with the CERTIFIED FINANCIAL PLANNER ™ professionals – feel better prepared to achieve their financial goals.

The Survey found that when consumers work with a financial planner:

do so,
to help them manage their money.
do so,
to provide peace of mind.
do so,
to assist in financing a major life event.
  • Knowing whom to trust is the biggest barrier to working with a financial professional.

    Among consumers surveyed, 68 percent rate “trustworthiness” as a very important consideration when choosing a financial professional – higher than any other consideration. But a similar percentage of consumers say they don’t know whom to trust when it comes to receiving financial advice.

  • Consumers with a financial plan are more confident,

    and those with a written, comprehensive plan are nearly three times more likely to feel strongly confident about achieving their life goals.

  • Financial planners with the Ceftified Financial Planner certification

    earn higher “excellent” ratings from consumers for important characteristics like “honesty and integrity,” “understanding needs and goals,” and “placing my interests first.”