Financial Planning: The True Definition

Anybody with an income can benefit from financial planning. Many people view it as a synonym of retirement planning. Financial planners, however, are professionals who help people develop plans for various investments and expenses. They are essentially professionals who help people to save, earn and spend more money than they would with their own resources.

What is Financial Planning?

There are many ways to break down the work of a financial advisor. One category of planning is the future. This includes when a client plans on retiring or transferring a business or estate. Others focus on the immediate or near future. These include tax planning and simple cash flow management. But, every form of financial planning follows certain basic steps.

There are many types of Financial Planning

  • Investment planning does not just include purchasing financial instruments or other assets. An investment advisor helps clients to think strategically about how they want to invest their portfolio. An untrained client may leave investments unprofitable or trade too frequently in order to fully take advantage profit margins. However, a financial advisor can help them to make more money through investments.
  • A retirement planner analyzes a client’s economic status and projects how much money the client should be earning from savings and investments to become financially independent by a certain age.
  • Cash flow management can be described as a type or financial planning that assists clients in controlling their income and expenses to help them save money. The goal of cash flow management could be to improve the quality of an individual’s life. A financial planner can help large companies improve their efficiency as well as their balance sheets.
  • Estate planning refers to the planning of an estate that anticipates the death or incapacitation of a client, and how assets and other belongings will be distributed. This type of work includes the creation of wills and the designation of executors and heirs.

Financial Planning

  • In the first stage, the client and the financial planner set goals.
  • The planner then gathers financial information as well as other pertinent data about each client.
  • Now, the planner analyses the information and decides what needs to be changed in order for the planner to achieve the goals set at step one.
  • This fourth step could require the resetting of goals to overcome obstacles identified during the analysis. If not, the client and planner will devise a plan that will help them achieve their goals.
  • The planning team executes the plan.
  • The sixth phase is the longest in Ed Rempel Reviews planning. The planner keeps track of progress toward the goals often over many years or decades. Time passes and adjustments may be required.

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