What is Financial Planning
Financial planning is defined as a process consisting of six steps that financial planning professionals use to consider all aspects of a client’s financial situation when formulating financial planning strategies and making recommendations.
Organizations such as FPSB have greatly elevated the level of professionalism of financial planners. Somehow this has not resulted in a transferable value to the consumers. Financial planning still remains a theoretical exercise delivering little applied value.Why?Is this because the financial process is more about how the financial planner will deliver a plan then how the consumer will implement the plan?
Why is Financial Planning not working out?
What if anyone could call himself a doctor? What if any doctors could call himself a cardiologist? What would be your confidence in the health profession? What if the only reason the doctor is practicing medecine is to sell you some form of medication in order to get a commission? Would you trust any medical plan proposed by that doctor?
DIY Financial Planning
DIY Financial Planning is about empowering the consumer in taking control over his personal finance allowing him to define what responsibilites he will retain and what responsibilities he will be delegating to a financial professional while creating a process built upon accountabilities that will ensure that the consumer achieve his financial goals and the financial security he/she desires.
The major problem with financial planning is a problem of scope. There are many components in financial planning which can make the process too complex. This is why the scope of financial planning must be limited to the goal that needs to be achieved. This is why strategic planning is so critical as it defines that scope.
It is a systematic process of envisioning a desired future, and translating this vision into broadly defined goals.These goals will define the scope of the planning. Strategic planning is about making the big decision that will allow you to determine the allocation of the resources need to meet the state goal×
It is the determination of the objectives that must be realized to achieve the stated goal established in strategic planning. Tactical planning is very important as it provides a breakdown of the measurable activities assigning and delegating authority to those who will be responsible for achieving these objectives. .×
It is a process dealing with how to execute the tactical plan. it is the process of linking the strategic goal to tactical objectives. It describes milestones, conditions for success and explains how, or what portion of, a strategic and tactical plan will be put into operation during a given operational period. An operational plan addresses four questions:Where are we now? Where do we want to be? How do we get there? How do we measure our progress?×