What Is A Personalized Financial Plan?

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Truly personalized financial planning is what most clients want. Alas, many so-called financial advisors offer little more than impersonal investment management.

One-size-fits-all advice isn’t personalized financial planning.

Personalized financial planning results from the combination of an advising team that knows the client and a specialist team that knows comprehensive financial planning.

Personalized financial planning is personalized in at least these seven ways.

Personal financial planning works with you not just for you. A good advisor comes along side you and partners with you. Your involvement throughout the process is necessary to make it customized.

Personalized financial planning begins with your life goals. A good advisor understands your goals, situations, and values. Every financial decision and investment should be made within the bigger context of your life goals. Investment products in isolation from your larger context is like pushing random buttons on a vending machine to try to acquire a Thanksgiving dinner.

Personalized financial planning organizes your financial life. An impersonal investment manager’s interest in you often ends at the potential size of your investment in his hedge fund. A personal financial planner concerns themselves with the whole of your financial situation. This requires having a team that routinely offers an extensive array of financial planning services and also takes the time to listen to what is happening in your life.

Personalized financial planning is specific. The answer of impersonal investment managers is often vague. “You should be fine,” they say. In contrast, with a personalized financial planner your safe spending rate will be adjusted for your target retirement age, your Social Security situation, and other personalized adjustments. And the calculation will be recomputed on a regular basis. Safe spending is just one of dozens of financial planning areas.

Personalized financial planning proactively anticipates your needs. A good advisor does not wait for you to ask the right questions. A good advisor anticipates your life transitions and proactively suggests options about how you may want to address and manage them.

Personalized financial planning provides you with the information necessary to make your own decisions. It is a fiduciary’s job to do whatever you would do if you had their time and expertise. Often that means providing you with an education about the areas of financial planning relevant to your situation. After getting to know your situation, a good advisor presents you with choices, explaining the risks and advantages of each option. An impersonal investment manager often insists, “Just trust me,” in loo of explaining.

Personalized financial planning helps you achieve your goals. An impersonal investment manager reports to you how he is doing with his investments. A personal financial planner reports and celebrates how you are doing reaching your goals. The process of working with a personal financial planner brings accountability to doing what it takes to meet your financial goals. Once your goals have been prioritized, a personal financial planner will identify the steps necessary to give you the best chance to achieve those goals. And every study done suggests that articulating your goals and having the accountability of someone else asking about them vastly increases the likelihood that you will achieve them.

Personalized financial planning is a bottomless task. Many people don’t know what personal advice a comprehensive financial planner can offer them. As a consequence, they settle for impersonal investment management by itself. But there is virtually no end to the services we could offer.

The Certified Financial Planner™ designation is one of the best ways to ensure that an advisor has the necessary training to be able to provide personalized financial planning. The CFP Board website explains:

Although many professionals call themselves “financial planners,” only Certified Financial Planner™ professionals have completed extensive training and are held to the highest ethical and educational standards. CFP® professionals understand the complexities of the changing financial climate and are committed to make financial planning recommendations in your best interest. No matter where you are in life, you’ll find confidence in working with a CFP® professional to evaluate your finances and develop a comprehensive plan for your financial future.

And if you want to ensure that your CFP® Professional actual offers personalized financial planning, the organization that they should be part of is The National Association of Personal Financial Advisors (NAPFA). The NAPFA website explains:

NAPFA insists that every NAPFA-Registered Financial Advisor meet the highest competency standards. All NAPFA-Registered Financial Advisors must:

  • Meet stiff credentialing and educational requirements
  • Be primarily engaged as holistic financial advisors (rather than merely investment or tax advisors)
  • Meet the most rigorous continuing education requirements in the industry
  • Submit to outside professional review, to ensure that they do not have the conflicts of interest that commissions bring
  • Submit a financial plan for review by peers before they can be admitted

There’s one way to ensure you’ve found a financial advisor who will put your interests first. Make sure they are a NAPFA-Registered Financial Advisor.

You should work with a personalized financial planner, not an impersonal investment manager.

Photo by Bruce Christianson on Unsplash

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)