Intro: What You Should Know About Corporate & Personal Financial Plans


You want to set yourself up for future financial success, but how do you know what you need to do first? If you lack the financial acumen and intricate knowledge of the investment world, you may want to consider hiring a professional to create a financial plan for you and your family.

The financial planning process can be easy and painless as a professional that works alongside you to create a unique plan based on your future expenses, future goals, and current financial situation.

What is financial planning? Is it possible to do online financial planning? What do you need to do first? Join us as we dive into an in-depth explanation to answer your questions.

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What Is Financial Planning?

It’s difficult to understand the reason for creating a financial plan without first gaining a little clarity on what a financial plan really is. First and foremost, you may want to consider hiring a professional financial planner to walk through this process with you.

While it is possible to create a sound financial plan on your own, someone with experience may be able to offer insight and different ideas of what would work best for you and your family.

Investopedia’s answer to the question “What is financial planning?” details the purpose of a financial plan: “To help individuals and families achieve their life goals through proper management of their finances.” Creating a cohesive and thorough financial plan involves several steps that are generally agreed upon:

  • Discuss the goals you and your family expect to reach in the near future and in the long term.
  • Figure out your own risk tolerance.
  • Determine your current financial status by gathering up information regarding your assets and budget.
  • Hear a presentation of recommendations from a financial planner.
  • Put the agreed-upon financial plan into action.
  • Monitor the financial plan for long-term success and tweak it as necessary.

Those six steps are the core features of the financial planning process, but we will break them all down into more manageable chunks in the coming sections.



Beginning the Financial Planning Process

According to The Institute of Financial Planning, one of the first steps of the financial planning process is to determine your short, medium, and long-term financial goals. In the short term, you may be interested in saving for a new car or paying off a student loan. A good financial planning process will force you to think much further into the future at your retirement or what you will do with your estate after you are gone.

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The basis of your financial planning process will then begin with an evaluation of your current finances. By reviewing your current income versus debt and expenses, you will gain a realistic idea of how much money is typically left over. Your financial planner should take a look at your cash flow, assets, insurance coverage, and current investments to get an accurate snapshot of your finances to determine where to go next.

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Finishing out the Financial Planning Process

The next phase of the financial planning process is to listen to the recommendations of your professional. A well-trained financial planner should be able to guide you towards making informed decisions about the future of your money and investments without forcing them upon you. He/she will then make revisions based on your input.

From this point, you will work with your financial planner to put the pieces together. Your financial plan may be carried out by the planner on your behalf, or he/she may simply guide the process, directing you to the appropriate professionals for each stage.

You should even make an agreement about how your financial plan will be monitored so you can track progress towards the goals established in the beginning. If your financial planner will be responsible for monitoring the financial plan, be sure to ask how often you will receive reports on the status of your investments.

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Corporate Financial Planning

If you’re considering going to a firm to create your financial plan, this is known as corporate financial planning. In this day and age, it is no longer necessary to go through the financial planning process via corporate financial planning. However, some people still prefer the familiarity and routine of face-to-face meetings with a well-known and trusted advisor. If you intend to move forward creating a personal financial plan with a traditional advisor, here are a few attributes you should look for:

  • Education: A good financial advisor should be a certified financial planner. This ensures that the individual is both licensed and his/her actions are regulated. Certified financial advisors (CFPs) are also required to take continuing education courses to further their knowledge of the financial planning process.

A fee-based advisor is the better option, but be aware that this kind of advisor may try to prevent you from making purchases or liquidating assets because it does negatively affect his/her bottom line.

For those just getting started, an hourly rate is usually the best option, especially if you don’t currently have a lot of assets. This sort of financial planner is generally new to the practice also and works extra hard to make sure you’re pleased and to secure future recommendations.

Hiring a certified financial planner can be extremely beneficial for your personal financial plan. A corporate financial planning approach gives you a specific person you can contact should you have questions regarding your progress, investments, assets or current financial situation.

It does require time and effort to book face-to-face meetings with your advisor, but if you prefer the comfort of knowing who is responsible for assisting you towards your financial goals, then it’s worth it to carve out that time. The other drawback is the fee associated with a corporate financial planning process. It is possible to create a financial plan for no cost at all via one of the many online financial planning sites.



Online Financial Planning

We discussed a corporal financial planning process when we answered the question, “What is financial planning?” but now we need to look at another avenue for creating a personal financial plan. Online financial planning is rising in popularity, negating the need for a brick-and-mortar building where you attend appointments with an advisor.

Mint, an online financial planning site, points out that its personal financial plan has many of the same benefits as a plan created in a brick–and-mortar location as well as a few added perks. You will still develop a long-term plan for your money and analyze your current financial situation.

As an added bonus, you are also able to access your finances any time without making an appointment. You can make changes to your financial plan at any time with no cost and generate easy-to-understand reports quickly. Maybe the biggest perk is keeping your information private versus sharing it with your financial planner.

Bloomberg argues that one of the more compelling reasons to consider online financial planning is the significant cost savings. In the personal story listed in the article, its physical financial planner requested a $5,000 fee to generate a financial plan whereas the online financial planning company it opted to go with was able to do the same for only $250. Fees will vary from location to location and from website to website, but this anecdotal example gives an idea of how drastic the savings can be.

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How Do You Choose a Good Online Financial Planning Site?

You know the things to look for with a personal financial planner: a certification in financial planning, code of ethics, price structure, and maybe even personal recommendations. However, what do you look for with an online financial planning site? Mint, a popular option, offers a list of things to consider before you create a long-term financial plan:

  • Portfolio and asset tracking: You should be able to look up information on your investments at any time.
  • Risk analysis: Make sure that each of your investments falls within your personal risk tolerance.
  • Mobile Compatibility: If you’re constantly on the go, look for a program that is compatible with all of your mobile devices as well.
  • Financial calculators: Calculate potential returns on investments you haven’t made yet to see if they are worth adding to your portfolio.
  • Goal tracking: Find a program with a feature that allows you to monitor the progress you’re making towards the goals you created.

online financial planning-min

Image Source: Mint

Huffington Post created a list of its top five online financial planning resources, all available at no charge to you. They each offer slightly different features, so you may want to consider doing some research to figure out which company best suits your needs when it comes to financial planning. However, each program is designed to give you more control over your money, your financial plan, and ultimately your future. Take a look at these five sites to get started creating a financial plan:

Of course, there are a number of other online financial planning sites available if you’re looking for an easier-to-use interface, different features or just a different offering of services. This list is by no means comprehensive of the many options available. You will want to research the security of any online financial planning site prior to making a commitment or entering sensitive information into its program.

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Conclusion

Now we can confidently answer the question, “What is financial planning?” Creating a financial plan is a necessary and important step towards directing your money where it needs to go to achieve your short and long-term goals. Whether you opt for a corporate financial planning approach or one of the online financial planning sites, a personal financial plan can assist you in taking charge of your current financial situation to make the most of your future.

Whichever route you take, be sure to do your own research to make well-informed decisions regarding your finances. Monitor your goals closely and make sure that whichever financial advisor or program you select will help you to do just that. Your financial plan is an important piece for your future, and you don’t want to it be neglected.



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