Financial Planning

What is personal financial planning?

Personal financial planning is the process of setting lifetime financial goals and implementing strategies to achieve them.  Progress towards goals is periodically reviewed and measured.  Planning and strategies for income taxes, investments, insurance and risk management, retirement, estate issues, college and education financing, business succession and employee benefits are all addressed in the financial plan.

Financial plans require value judgments.  An individual's or family's investment philosophy toward potential returns and risks is an important consideration in making these value judgments.  An effective financial plan also takes into account lifestyle, family, emotional, and religious considerations and often becomes a major part of one's life plan as well.  Alternative financial strategies and their potential consequences that affect lifestyle considerations are analyzed and included in the process.

Although a CPA or other financial planner may specialize in one of the highly interrelated areas of financial planning, such as tax planning, investments or life insurance, a working knowledge of all areas is required to fulfill the client's wishes.  Financial planning is thus an art more than a science, because it involves alternatives based on values rather than objective financial optimization.

Estate planning involves establishing goals and strategies for transferring assets and providing for family members, friends, and charities at death.  Estate planning is usually integral to a financial plan because estate planning objectives often and usually affect lifetime financial goals.  Asset protection planning is both an estate and lifetime planning objective.

Investment planning includes strategies for asset allocation and systematic funding.  Retirement, education financing, and often life insurance are included in the investment strategy.

Insurance and risk management require analysis and evaluation of risks and obtaining insurance or other protection to limit financial loss from such risks.  Life insurance provides income security, estate liquidity, and business continuity as well as investment features.

Employee benefit programs are usually a major part of retirement income planning, life insurance and disability risk assessment, and healthcare insurance planning.  Employer 401(K) plans, stock purchase, and stock option plans are also reviewed and analyzed as part of a financial plan.

Income and estate tax ramifications should be considered in developing employee benefit plans, investment plans, insurance plans, and retirement plans.  Some tax strategies require trade offs between income and estate and gift taxes.

Why use a CPA/PFS for financial planning?

Licensed CPAs have long been considered the standard for financial knowledge, objectivity and integrity, prepared to handle the most demanding tax situations.  A Personal Financial Specialist (PFS) credential can only be earned by CPAs, and it requires additional education, real-world experience and extensive knowledge to pass a rigorous exam.  A CPA/PFS has an unparalleled understanding of how to help clients benefit from today's complex decisions about taxes, retirement, estate planning, investments and insurance.  Anyone planning their financial future will sleep better knowing their plan is CPA Strong.

All financial planners are not created equal.  A PFS is more than a financial planner - he or she is a CPA with a the powerful combination of extensive tax expertise and comprehensive knowledge of financial planning.  This knowledge is critical to obtaining the most valuable, objective advice possible.  All areas of personal financial planning - including estate, retirement, investments, and insurance - have tax implications, and the PFS professional has the experience, ethics, and expertise to get the job done right.