Do you currently have investments?

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This topic contains 1 reply, has 2 voices, and was last updated by Greg Phelps Greg Phelps 2 years, 6 months ago.

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    I’ve always wondered, what is the difference between financial planning and investment planning?  Isn’t it the same thing?

    Greg Phelps
    Greg Phelps

    Good question.

    On the surface they are very similar.  Financial planning and investment planning aren’t too far apart for the average investor.

    The thing is for a financial advisor, they’re very different.  Financial planning is the process of aligning an individuals financial means to their goals.

    For example, when a retired client comes into the office and we do the entire Retirement Architect program, we go through a very extensive process of discovery.  My job is to align the clients financial assets, current and future income streams with their financial objectives – current and future.

    I do this through an extensive process of trial and error to see what works best for the client.  I also use some extremely sophisticated software.

    Here’s where the differences come in.  Investment planning is a COMPONENT of financial planning.  You can’t have an investment plan (sell I suppose you could, but you shouldn’t) without a financial plan.

    It works like this – the financial plan dictates the clients asset allocation (i.e. what type of portfolio they need to accomplish their goals etc).  The asset allocation is then populated with the appropriate asset classes.

    The investment plan is that asset allocation with specific investments including mutual funds and ETF’s.  It’s also a process of investment management, rebalancing, ongoing reviews etc.

    So the financial plan is all encompassing, and the investment plan is a component of the financial plan.

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