What is Comprehensive Financial Planning? (2024)

It would seem that the phrase ‘Comprehensive Financial Planning’ is quite clear and easy to understand. However it’s fascinating to hear the different definitions I get when I ask people what they think comprehensive financial planning is. Answers range from managing investments only to including tax planning and maybe retirement planning.

You may find a financial advisor that includes debt management, tax management, investments and insurance in their comprehensive financial plan. This collection seems overarching, but still leaves some important issues ignored.

There are many variations and no technical definition issued by the regulatory bodies that defines comprehensive financial planning. So it’s not unheard of that very few people understand the total picture that encompasses comprehensive financial planning.

What is comprehensive financial planning?

Comprehensive financial planning involves the detailed review and analysis of all facets of your financial situation. This includes areas such as:

• Cash flow analysis
• Retirement planning
• Risk management
• Investment management
• Tax management
• Estate planning.

If an advisor conducts a comprehensive analysis, it will reveal your true financial condition and then the proper plan can be recommended.

Think of a good comprehensive financial plan as being very similar to a health and wellness plan. You need to focus on and take care of all aspects of your health, not just a few. This can be called your comprehensive health and well-being plan. After all, each of the many aspects of your health and well-being depend upon and affect each other, all working together to help create optimal health and wellness.

And just the same, each of the many aspects of your financial situation depend upon and affect each other, all working together to help create a strong financial outlook. The benefits for both do not just affect you. Your family shares in the relief, comfort and advantages of your smart decisions as well.

Components of a Comprehensive Financial Plan

A comprehensive financial plan involves:

• A thorough review of your current financial situation
• A discussion and understanding of your long term, financial goals
• The development of a plan including all financial products needed to take you from where you are today to where you need to be in the future

A solid financial strategy includes, among other topics specific to your life situation and goals:

• Retirement planning
• College planning
• Tax management
• Estate management
• Risk management
• Debtstructure
• Insurance
• Complex life issues. This includes your family structure, such as taking care of aging parents now, or perhaps sooner than you expected to.

The only way to create an optimal financial plan, the only way that financial management professionals can help their client fully, is to understand the personal circ*mstances and look at everything: every bank statement, tax return, insurance policy, everything – in order tomake qualified recommendations.

It would be difficult for your financial advisorto help you without first learning about, then assessing, then addressing each portion of your financial picture.

You need the whole picture.

Again, confusion about what constitutes comprehensive financial planning is eyebrow-raising, but the variations out there may be because there is no strict regulatory definition of it. But the industry is slowly moving in the direction of embracing a more all-inclusive standard. We’re already there.

Listen to our podcast on comprehensive financial planning for more information and how this type ofservice helped one senior gentleman.