What exactly is a financial plan?

It’s a written document that takes a whole picture look at your whole financial situation, both now and in the future. It identifies and prioritizes your short, medium and long-term lifestyle and financial goals; it clarifies your current financial position, including your net worth and cash flows; and it specifies the steps and strategies you need to take to get from here to there.

I like to use sports terminology and break a plan into offensive and defensive components. The offensive would include cash management, tax planning, investment planning and retirement planning. The defensive would be insurance and risk management, estate planning and legal considerations. The reason why I like to break it into pieces is that offensive strategies drive your financial position forward, whereas defensive strategies protect you and your family in case something should go wrong. Think of your plan as a GPS. You wouldn’t navigate around a busy city on your own. Your GPS guides you, tells you when you’re off-track and recalculates. That’s what a plan and a qualified planner will do. Some people worry that a financial planner will take all the fun out of your life―take away your vacation, make you suffer. On the contrary.


If you think a financial planner only handles your RRSPs or taxes, or that financial planning is the same as investment planning, you’re only seeing a small part of a much bigger picture. In fact, you may be missing out on many of the benefits that the financial planning process has to offer.

What exactly is “financial planning”?

It is not an investment statement. Financial planning takes a whole picture view of you, your lifestyle, and your financial needs and priorities. Without this broad approach, it’s like trying to see out a window with the curtains half-closed. You need the full view to understand and make the right decisions about every aspect of your finances.

What does a financial plan include?

A comprehensive financial plan covers every area of your financial life, from investments and real estate to insurance and retirement planning. There are several financial planning areas that a comprehensive financial plan may consider:

  • Financial Management: Your current and projected future financial position, including cash flow (the balance of what you’re earning, spending and saving), budget and net worth.
  • Income & Wealth Protection Management: Strategies to minimize your exposure to unexpected financial loss due to death, health issues, pandemic, property damage, business and other risks.
  • Investment Planning/Wealth Management: Managing your investments based on experience, attitudes, objectives, times horizon, risk tolerance and need for income.
  • Retirement Planning: A plan for your post-employment financial well-being, comparing your desired retirement lifestyle with retirement assets, planned savings, expected sources of income, and return on investment.
  • Tax Planning: Your current and future tax obligations and strategies to minimize or defer taxation on personal and/or business income.
  • Estate Planning and Legal Aspects: Estate planning includes arranging for payment of expenses and obligations after your death, as well as transfer of your wealth and other assets to successors as specified in and outside your will. Legal aspects cover your legal rights and obligations, including spousal and child support obligations or entitlements, third party obligations, shareholder, partner or trust agreements, and powers of attorney or other mandates.
  • Business Planning: Includes key person coverage, loan coverage, buy-sell agreements and insurance funding, retirement planning, tax planning, succession planning, benefit plans, pension plans and more.

How can a financial planner help bring it all together?

An appropriately qualified financial planner like a Certified Financial Planner® (CFP®) professional will take your full financial picture into account, guiding you on how a decision about one aspect of your finances may affect other key areas. For instance, an investment decision could have tax consequences that are harmful to your estate plan, or a choice about saving for a child’s education may affect when and how you meet your retirement goals.

Your financial planner can take many seemingly conflicting priorities into account and help guide you toward the right decisions—the choices that will help you reach your financial and life goals, both today and in the future.

Find a financial planner with as much experience and knowledge as possible. Be sure to not settle for just a CFP®️ if better is available. Do some research because advice and experience are what you’re paying for. 

 Dave Otto B.B.A. CFP®️ CLU®️ CH.F.C.®️ EPC™️

Founder and President, DO FINANCIAL

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