Topics in Financial Planning: What do Financial Planners do for their clients?

When people meet me and I give them my card which has the title "financial advisor" on it and a company name with "wealth management" and "Registered Investment Advisor" on it, I get some interesting reactions. "I'll come and see you when I get some wealth" or "I don't have any money, so I don't need you" are common reactions. Then I also get "I have a broker who I am very happy with he/she made me xxxx% last year" (usually somewhere around S&P 500 gain for the year).

So I thought it would be worthwhile if I explain what a comprehensive financial planner does for clients and that although many planners are very involved with investment management and the wealthy tend to use them, planners can do many things to help those of more modest means. Investment management is something financial planners do to help their clients, but that is part of a larger function of helping clients.

First and foremost, financial planners help clients formulate, identify, prioritize, and quantify their life financial goals and then the planners create a plan for the client to meet their goals. Some planners might stop there, but most will work with the client over time to implement the plan and change it as goals evolve during normal life changes. The successful planner will become a partner with their client, advising them on financial decisions varying from the best way to buy a car or house to paying for student loans or how to save for retirement, educating the kids, or what benefits to take at work. The planner brings to the table his experience and knowledge to help the client make decisions which are best, not just for the sunny day scenario where nothing goes wrong, but will help the client weather the storms of life, which can include family members going through job loss, sickness, divorce, death, or other unforeseen events.

Sections in a comprehensive financial plan might include:

1. Goals
2. Cash Flow Planning and Emergency Fund
3. Education Planning
4. Retirement Planning
5. Risk Management (Life and Disability Insurance)
6. Employee Benefits
7. Health
8. Tax Planning
9. Buying a House
10. Property/Casualty Insurance
11. Investment Management
12. Estate Planning

A broker does not look at many of the items on this list. A broker cares about  item 11 and maybe items 3 and 5. A financial planner is going to look at all 12 of these items and make recommendations so the client can make good decisions in all these areas.

Over time I will write blog posts which cover all these 12 areas. So everyone can understand the benefits of comprehensive financial planning!