A lot of people use the term “financial professional” in many different ways. They could mean someone who gives investment advice, manages accounts, offers financial advice, helps someone set financial goals, or manages wealth. The suite of services a financial professional might offer can be numerous, but it’s important to know they differ in many ways. Whenever I serve my clients, my goal is to make sure they are clear on what we are doing. This helps them set their expectations as we work together. In this guide, we hope to clarify the difference between two terms, financial planning and investment management.
Financial Planning vs. Investment Management
According to the CFP Board, financial planning is a collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances. Essentially, it’s a holistic process that looks at all parts of a client’s financial situation to create a customized plan to achieve their financial goals. It includes the following subject areas:
- Retirement planning
- Education planning
- Tax planning
- Investment planning
- Estate planning
- Risk management and insurance planning
Investment management, on the other hand, aims to meet particular investment goals for the benefit of clients whose money a financial professional has the responsibility of overseeing. It is a siloed service that does not necessarily incorporate the other aspects of a client’s unique financial situation. Financial planning usually includes investment management, but investment management does not automatically include financial planning.
Our Financial Planning Process
When you work with me, I focus on three key areas: wealth management, investment management, and retirement planning. Because of the diversity of knowledge in these areas, I am able to look at your financial story holistically and offer advice that fits your specific situation.
When we sit down to meet, the goal is to work together to have an open and honest dialogue to understand your situation and create a plan that helps you pursue your goals effectively. I value integrity and respect in how I treat anyone I work with, and this is expressed in the process we walk through together.
- Discovery: Understanding who you are as a person is the first step. Here we clarify your definition of personal and financial success. Then we look at all aspects of your financial life, your specific values, goals, time horizon, income and liquidity needs, risk comfort, and more. Finally, we make a “Mutual Commitment” to work together and put your plan in place.
- Analysis: To thoroughly understand your situation, we take a comprehensive inventory of your current financial position, including strengths, gaps, and weaknesses. We also analyze the effectiveness, composition, and expenses of your existing portfolio, and review specific items for action to make sure your goals and financial situation align.
- Development: Based on our analysis, we develop a long-term wealth plan focused on getting you from where you are today to where you want to be in the future. Through this process, we address any items that need clarification and make alterations based on any additional information we receive.
- Implementation: In addition to creating your investment portfolio we also work with a team of financial professionals to address all of the non-investment action items we’ve identified. You will receive an Investment Policy Statement (IPS), which documents what we have agreed to and assigns responsibility and accountability.
- Monitoring: Our Discovery Process is part of our ongoing meetings, so your plan always reflects your life. We monitor your plan closely and provide you with clear and concise reporting, including financial market fluctuations, and your portfolio’s exposure to the investments that fluctuate as well. Through periodic rebalancing, we make sure your portfolio maintains its target allocations.
At the end of this process, we will have developed a solid relationship that evolves along with your financial goals. The plan we created is just the first step; I am committed to you on the journey toward your desired future.
Are You Looking for Comprehensive Financial Planning?
Are you ready to take that first step? It can be daunting, but together we can build a plan you feel confident in. It’s never too late or too early to make your dreams a reality. My hope is that when you work with me, you’ll see that your goals are within reach and you’ll experience my core values of integrity, transparency, caring, respect, teamwork, and professionalism. If that sounds like a financial advisor you’d like in your corner, email me at email@example.com or give me a call at 916-967-3208. Let’s find out if I am the right fit to help you pursue your ideal financial future.
James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources and knowledge to help his clients experience simplicity and clarity in their financial lives. Jim spent more than 20 years working for GE Financial Advisors, both in its insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients.
Jim lives in Folsom, California, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities like kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.