In the world of financial advice, where does Life Planning fit?

You’ve heard about Financial Life Planning, but how is it different from other financial advice offerings out there? An image of concentric circles conveys the relationships at a glance: Life Planning includes Comprehensive Financial Planning, which includes Investment Advice.

Here is what you can expect from each of these three levels of financial advice and where Life Planning fits.

Tiny Inner Circle: The narrowest service is investment advice

Standalone investment advice is most of what goes on in the world of financial advice. The advisor typically finds out a little bit about your assets, age, and tolerance for investment risk. Based on this information, they make a recommendation about how to invest your savings or retirement money.

Giving investment advice alone is a perfectly legitimate service. It’s just that it’s very narrow. The advisor has little to go on when making a recommendation. In my view, even with the very best intention to do the best job for the client, it’s difficult to make an excellent recommendation without seeing the bigger picture. It’s like the advisor is looking through a keyhole into the room that is your financial life. They only see a tiny portion of what’s going on.

Middle Circle: Comprehensive financial planning is a robust service

Comprehensive financial planning starts with your advisor — usually a CERTIFIED FINANCIAL PLANNER™ professional — learning a lot more about you. So when they give investment advice, it’s likely to be more dialed-in to the precise needs of you and your family. But the real point here is that comprehensive financial planning includes so much more than investment advice.

The planner requests, and you provide, information on the whole picture of your financial life. In addition to your investments, they analyze information on income and compensation, budgeting and spending, employer retirement plans, employee benefits, life insurance, disability insurance, home mortgages, social security benefits, income taxes, and more.

A good financial planner also talks to you about your goals. Maybe you have an early retirement goal, or a college savings goal, or you love the idea of being mortgage-free. These will all be built into the plan. And when it comes to investments, a comprehensive financial planner will advise you on how to best use your employer retirement plan along with individual investment accounts.

These are all things that are outside that tiny circle of investment advice.

The Fullest Circle: Financial life planning

You may be thinking that comprehensive financial planning pretty much covers everything. What could possibly be in this largest circle?

For a financial plan to be most beneficial to you, we need another layer. We need to align the plan with your life. Your best life. Your ideal life.

Often financial planning is comprehensive, in that, it gives you an excellent plan to succeed at the life you are living now. But what if the life you are living now is out of sync with the life you want to be living?

Here’s where Life Planning comes in.

Life Planning starts with a process for discovering (or remembering) the full life you want to live. Then, we align your money with this vision and work toward making it happen, no matter where you are starting from.

As a Life Planner, I want to first discover your most essential goals for a fulfilled life before formulating your financial plan, so your finances can fully support those goals. Once we have your vision vividly painted, we do a comprehensive financial plan. And that plan is much more tailored, meaningful, and exciting because we built it within the broader context of your ideal life.

We call it Life Planning because what’s really important is your life, not your money.

Life planning is financial planning done right

Some people are fine with giving or receiving investment advice alone. Not me. I don’t like the idea of advising on hundreds of thousands of dollars without really knowing my client. And I don’t think anybody wants their life to be all about owning an investment portfolio. Rather, the investment portfolio should be in service to all the things you want to do with your life.

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Gretchen Behnke, CFP®, RLP®, earned the Registered Life Planner designation at the Kinder Institute of Life Planning. Would you like to develop a financial plan based on your most essential life goals? Learn more about our services here.