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What’s a Financial Plan?

A Financial Plan is a written document, developed by a financial planning professional, such as a CFP® professional or QAFP® professional, that provides an assessment of your current financial situation and strategies for achieving your identified goals, values, needs, and priorities.

 


A Financial Plan:

  • Addresses your day-to-day Financial Management needs (analysing income, expenses, assets and debts) and at least two additional areas such as:
    • Investment Planning (growing and managing savings)
    • Retirement Planning (planning for after regular employment has stopped)
    • Insurance and Risk Management (protecting against financial loss from life events such as accidents, illness, or death)
    • Tax Planning (assessing your current and future tax obligations)
    • Estate Planning and Law for financial planning (arranging how assets are structured and passed on and assessing legal protections such as a will, trust, and power of attorney or the equivalent).
  • Analyzes the interrelationships among these areas and the trade-offs involved
  • Includes documented assumptions, strategies, recommendations, and an action plan that specifies what needs to be done, by whom, and when.

A Financial Plan may also highlight the importance of regular reviews to ensure the plan remains relevant as circumstances change.


Understanding the Financial Plan: An Interactive View

A Financial Plan evaluates at least three relevant financial planning areas but may evaluate up to all six financial planning areas and addresses the interrelationships among them.

The Financial Plan must include: Financial Management analysis and at least two of: Investment Planning; Insurance and Risk Management; Tax Planning; Retirement Planning; and/or Estate Planning and Law for Financial Planning.

Analysing income, expenses, assets and debts

Discovery and analysis of a client’s current and future financial position is fundamental to a financial planner’s ability to provide financial planning advice with respect to the other planning areas. This analysis may be captured as its own area or integrated into other areas within the plan.

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Investment Planning+
Insurance and Risk Management+
Tax Planning+
Retirement Planning+
Estate Planning and Law+

Select a topic to view more information.

 

Why is a Financial Plan important?

Having a personal financial plan gives you:

  • Direction – A clear roadmap with specific steps to follow and milestones to track your progress
  • Confidence – The reassurance that you’re prepared when life throws surprises your way, like job changes, unexpected expenses, or a new opportunity
  • Real results – A plan to reach your goals, like buying a home, saving for your kids’ education, or retiring with a sustainable income

The financial planning process is flexible. Some people just want a plan, and they will implement it independently. Others want ongoing help to create, implement, and adjust their plan as needed. In working with a financial planning professional, you determine what suits your needs.

 



Read our insights

With careful planning and professional guidance, you can move closer to achieving the milestones that matter most to you. Read on to find out:

Achieving Your Life Goals Through Financial Planning

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