What True Financial Planning Is And Why It Matters

When people hear the words “Financial Planning” they often think “Investments”. The reality is that true financial planning is much, much more than investments. Nearly everything in our world is money-related, so when we think financial planning, investments/savings is often one of the first thing that comes to mind. If you are interested in improving your life, creating a financial plan could be one of the best things to do. But, in order to get the most from your financial plan I believe you should know what true financial planning is and why it matters.

This will be the first of a number of posts about my thoughts on the whole financial planning process, the state of the current financial planning industry and why I think that financial planning needs to be looked at differently if we really want it to be as effective as it can be. This post will introduce my thoughts on what true financial planning is and why I think that it matters more than ever in today’s world. Future posts will cover the key components of what I believe a true financial plan should contain and how I go about implementing those components in the financial planning I do for clients.

If you are motivated and interested enough to do your own financial planning, the information I’ll cover should be very helpful to you. If these posts get you thinking about your own situation and you would like some help you can always set a time for a no obligation call to find out more about my services.

What True Financial Planning Is

Financial planning as we know it today got it’s start when 13 individuals met in 1969 at O’Hare airport, Since then, financial planning has grown and developed as a profession. Despite this growth, much of what passes for financial planning today is not what I believe financial planning could, or should, be. Financial planning was originally conceived as a better delivery system for financial services. In other words, a better way to sell financial products (investments, insurance).

Over the years that emphasis has changed to a certain extent but many financial plans are still being used as either a justification for, or confirmation that, a specific financial product makes sense for the client. This emphasis on numbers & financial products (and the compensation that can come from the sale of those products) is something I see as a serious problem, but something that can be corrected by re-imagining what financial planning really is. In other words, move from product centered planning to what I call “True Financial Planning”.

I see True Financial Planning as different from “legacy financial planning” in these key ways:

  • Every financial plan begins with a genuine understanding of the client’s experiences, behaviors, values, dreams and motivations instead of beginning with a “how’s your money invested?” conversation.
  • The financial planning process is an ongoing process instead of a one time event.
  • The financial planner is a fiduciary who is legally and morally obligated to act in the client’s best interests at all times, not a registered representative, agent or broker who is obligated to act in the best interests of the companies they represent.
  • The financial planning process should be something that anyone, regardless of net worth or “investable assets” can take advantage of if they are ready to improve their lives.
  • The financial plan naturally leads to what, if any, financial products/services might be needed instead of using the financial plan to support or verify the pre-selection of a certain type of financial product or service.

Why It Matters

Why does true financial planning matter and why should you care? The answer is that our world is too complicated, our money is too important, and our lives are too valuable to not have a true financial plan in place.

Think about it, are most of us going about our lives the way we do because we “want to”, or because we “need to”. My guess is that it’s because we feel we “need to”. Who wants to do that? Wouldn’t it be much more enjoyable, empowering and exciting to do what we do because we actually want to do it?

Imagine for a minute if you were able to build a picture of what you truly wanted to achieve with your life and know that you have a plan in place to make that happen. How would that make you feel?  Well, that’s the goal of true financial planning…to get you from “need to” to “want to” and help you get the most from your life.

How To Get Started

Building a true financial plan takes work, effort and commitment over a period of time. This type of planning is not a one time event but rather an ongoing series of events that help you grow, develop and evolve. The goal is to connect your money and your values with your life, allowing you to reduce financial stress and live the life you were meant to live.

Your financial plan should be based on who you truly are as a person and what you really want to accomplish with your life, not based on what some large financial services company has determined that a “typical” client should do. In order to construct a true financial plan, you need to put vague, mass-marketed and overused words like “Retirement”, “Financial Security” and “Investor Profile” off to the side and start from the beginning, building your own unique plan without any pre-conceived expectations of what that plan should (or shouldn’t) contain. As you work through the process you will naturally come to know what is right for you and your family. This happens because the whole planning process is centered on you, not numbers.

Four Key Components

There are 4 key components to building a true financial plan. I have built a process around these components that I call the Clear Wealth Method. Here are the the four components:

  1. Live Your Values: You need to determine who you truly are when it comes to money and what you want your money to do for you in your life. This knowledge will be used to begin building a vision of what it is that you ultimately want to achieve over your life.
  2. Meet Your Obligations: To build a workable financial plan you need to take the time to honestly and completely assess where you are currently, with all the opportunities and challenges that come with living in the world today.
  3. Achieve Your Dreams: Once you have built a vision of who you want to become and combined it with the reality of your current situation you are ready to start re-imagining your life, implementing your plan and beginning the move toward your ideal life.
  4. Get More Life From Your Money: The final step is to continually reassess and evaluate your situation and make sure that you are doing everything possible to keep on the path that you have set for yourself. If your situation changes you need to be able to adjust your plan to meet your new reality.

The Clear Wealth Method is definitely something that you can do yourself but many people find that working with a financial planner is helpful. The financial planner can act as an independent voice, provide expertise and knowledge, and help keep the process moving forward and on track.

Stay Tuned

Over the coming weeks I will be adding posts that will address in more detail each of the steps in the Clear Wealth Method. In the meantime, if you are interested in learning a little more about some key habits that can directly impact your success in building and sticking to your financial plan you can download our 6 Key Habits That Drive Financial Success guide.

The guide gives some more detail on the Clear Wealth Method and lists six key financial habits that can help you achieve financial success and live the life you want. The guide also gives tips to help you put the habits to work in your life. You can use the guide to begin your own true financial planning journey.

Contact And Connect

If you have any questions about your own situation, or would like an independent second opinion on anything in your financial life, you can set a time for a no obligation call to discuss things further. If my services might be a match for your needs I’ll let you know. If not, I’ll let you know that as well.

To leave me feedback, comments and suggestions on how I can make this blog better, Just email me at mark@financialclaritypartners.com .

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