What is the Difference Between a Financial Plan and a Financial LIFE Plan?

When it comes to planning for the future, there is no shortage of professionals positioning themselves as the “right fit.” Investment managers, financial planners, financial life planners—but what is the difference between a financial plan and a financial life plan?

Some people need convincing to seek out any kind of professional financial help. But if you are ready to enlist the help of an advisor, you may be wondering what the difference is between all the different job titles. Financial planner, financial life planner, wealth manager, financial advisor, investment manager—the list goes on and on. 

What is Financial Planning?

You might have heard the terms financial planner and financial advisor used interchangeably, but there are some key differences between the two. A financial advisor (or investment/wealth manager) is a broad term that refers to professionals that help to manage your money. They usually hold a license from the US Securities and Exchange Commission (SEC)  depending on the type of financial products they typically work with.

Financial planners are a subset of advisors that take a more long-term and comprehensive approach to money management. They build plans that incorporate investing, as well as a variety of other services all centered around helping you reach your goals. 

Exactly which services a financial planner offers depends on the individual, but they usually include areas like:

  • Tax planning
  • Retirement income planning
  • Estate planning assistance
  • Business planning
  • Investment Planning

Investing is certainly an important task, but for the financial planner, it’s just one of many tools in their toolbox. Financial planners also need to be licensed to give financial advice. That being said, the gold standard for financial planning is the CFP® designation.

Financial Planning is About Reaching Your Goals

Helping you meet your financial goals is the name of the game for financial planners. 

Maybe you want to retire at 67 and spend your retirement traveling to see your grandkids all over the country. Maybe you want to start a consulting business after you retire and move to Texas.

Whatever your goals, a financial planner can help you get there by building a financial plan with your goals at the center.

With a financial planner, you bring them your goals, and then they help you figure out how to achieve them by helping you evaluate how much you’ll need to invest, come up with a timeline for meeting your goals and much more.

A financial advisor is more than an investor. They’re assessing your various financial goals and then hunting down solutions to help you meet them.

This might sound pretty great (and it can be!), but would you believe it could be even better?

What’s Better than Financial Planning?

In the realm of finances, the answer to that question is financial life planning. Of course, we all have different preferences but it doesn’t get much better than having a financial plan that is perfectly suited to your particular life. 

Having goals is all well and good, but if those goals aren’t driven by your personal values, then they may not be serving you well. Just as important as it is to have value-driven goals, having a plan to achieve them is the key to success.  Financial life planning makes the best use of your time, money and talents.

If you walk into an advisor’s office and say, “I want to retire at 67 and then travel to Europe every year and live near my grandkids in Miami,” any advisor worth their salt can crunch the numbers and build a plan. 

If you bring a set of goals to a financial planner, they’ll input your parameters and help you come up with a plan and a timeline to determine what it will take for you to reach them. 

While that sounds good (and may suit the needs of many people), we think one of the most important questions an advisor can help you answer is not “how” but “why.” 

Understanding the why behind your goals is the best way to stay motivated. It also inspires you to do the work to achieve those goals. This understanding helps you evaluate trade-offs between different goals, ensuring that you are working toward goals that are most important to you, not what is expected of you.

What is Financial Life Planning?

Financial life planning is about aligning your goals with your values.

Where a financial planner takes the input of “your goals” and then gives an output of “your plan,” a financial life planner takes the input of “your goals” and says, “Okay, that’s great. Let’s see if we can do better.”

When you go to that financial planner’s office and say, “I want to retire at 67,” they’ll say, “Great, here’s a plan.” 

But say the same thing to a financial life planner, and their response will be, “Okay, why 67? What do you want to do after that? What do you want to do before that? What if we could make it 62 rather than 67?”

A great goal for one person might be a terrible fit for you, your temperament, your current resources, or your interests. Financial life planning begins with an in-depth look into your values as a human being, as well as an honest assessment of your financial possibilities.

Your Plan Should Reflect Your Values and Situation

What makes you tick? How patient are you? What does your financial portfolio look like now? How risk-averse are you? Do you value being mobile or would you like to stay rooted somewhere?

These are the questions a financial life planner seeks to answer.

With a robust understanding of who you are as a client and what kind of possibilities are available to you financially, a financial life planner can help you identify which goals align with your personal values and make the most sense for you.

This is what makes financial life planning different. Every case is unique and participates uniquely in the broader spectrum of investment possibilities to achieve goals that make sense for you.

Want to re-examine your goals with a financial life planner? Click here to schedule a complimentary consultation with one of our advisors

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