Financial Planner

Updated on January 4, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Financial Planner Definition

A financial planner is a professional who develops and delivers tailored financial plans for their clients. Fundamentally, the financial plans or strategies developed are used to achieve long-term financial goals by the clients.

Financial Planner

It is an important component while managing finances. It goes beyond simply increasing savings and cutting down on expenses. Financial planning encompasses retirement, estate, and tax planning, managing and creating wealth, and portfolio diversification.

Key Takeaways

  • A financial planner is a professional who helps individuals attain medium- and long-term financial goals over a predetermined period.
  • There are seven steps involved in the planning process: understanding, identifying, analyzing, developing, presenting, implementing, and monitoring the clients’ goals.
  • Financial advisors are professionals who assist in managing money or specific investment goals. In contrast, planners indulge in making a long-term plan and associated communication by analyzing the client’s financial statements and other details.

Financial Planner Explained

Financial planners specialize in financial planning services to individuals and businesses by utilizing the knowledge and skills gained over time in the financial field. They also keep in mind the realistic and futuristic goals of the clients. They analyze every situation and use their expertise to construct apt strategies to attain financial goals. They also advise on financial instrumentsasset allocations for retirement, debt repayment methods, etc.

In the United States, the Certified Financial Planner Board of Standards, Inc. (CFP Board), which establishes and enforces standards for CFP-certified planners, has devised a seven-step financial planning process. It considers all aspects of a client’s personal and financial situation while formulating strategies and providing recommendations on financial planning.

According to the CFP Board, “Financial planning is about supporting individuals and families, especially to plan for crucial moments in their lives. It is a process of close collaboration between a client and a financial planning professional who the client has selected and entrusted with their most private financial details, ambitions, and anxieties.

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Seven Steps Of Financial Planning

There are seven most important steps of the planning as follows:

  • The first step is understanding the client’s personal and financial situation. Next, the professional analyzes the data to assess the client’s financial situation.
  • The second step is to identify and evaluate financial objectives. Subsequently, the planner helps the client identify, select, and prioritize the goals.
  • The third step is to review and analyze one or more different courses of action, whether each step maximizes the potential for attaining the financial goals promised to the client and how each goal integrates with the client’s personal and financial situations.
  • The fourth step is to develop planning recommendations. As a result, the planner chooses one or more recommendations to maximize the outcome for addressing the client’s funding requirements.
  • The fifth step is presenting the advice to the client and the facts while formulating the recommendations.
  • The sixth step is about implementing the recommendations given to the client. Furthermore, it is about helping the client choose the product or service and perform a course of action to attain goals.
  • The seventh and last process involves monitoring the progress toward achieving the goals at regular intervals and collecting the most current information about their financial situation after going through all the steps.


A financial planner’s responsibilities include helping clients set financial goals and implementing the developed strategies to achieve those goals. They analyze a company’s or an individual’s financial risk, reward, or opportunity. In addition, they are specialists in analyzing market performance and adopt best practices to advise people to invest in certain financial products that give clients high yields.

They analyze the financial statements, develop budgets, deliver financial advice and prepare analyst reports for their clients. In addition, they provide clients with information on relevant topics such as insurance, mutual funds, investment planning, retirement planning, estate planning, and tax planning.


Let us look at examples to understand the concept better.

  • A planner helps working professionals increase retirement savings by providing a comprehensive planning input compared to the self-directed retirement plan. The planner provided a plan that included identifying the tasks necessary to accomplish a retirement goal, encouraged frequent engagement to monitor progress, and aided in properly predicting the amount of retirement income needed to finance household retirement objectives.
  • Another example is associated with the financial planner software. Tools like CRM, portfolio management, investment analytics, and risk tolerance softwares enhance the planning process. Professional planners commonly use these programs. In addition, there are simple tools that individuals can use directly for planning instead of opting for a service offered by the personal financial planner.

Financial Planner vs Advisor

Financial planners are a type of financial advisor that assists in creating a complete plan which helps an individual or corporation achieve their investment or long-term goal within the predetermined period. They analyze all possible financial aspects of their client with the help of their financial statements and other financial details provided by the client to understand the current situation. They usually charge fees which can be monthly, quarterly, annual, or project-based.

In contrast, financial advisors usually focus on specific investments instead of analyzing the client’s financial health and background. They typically charge a fee for assisting with financial management activities or commissions based on the product sold. Their services include managing investments, recommending stock investments, estate planning, retirement planning, investment management, and tax planning. Most advisors possess licenses FINRA Series 7 Exam or Series 65 Exam.

Frequently Asked Questions (FAQs)

What is the role of a financial planner?

The primary responsibility is to assist clients in achieving their financial goals. Planners collaborate closely with clients to clarify goals, examine goals, determine risk tolerance, and ultimately produce an apt strategy. Furthermore, they also ensure that the goals or objectives are monitored, analyzed, and implemented on time.

What are the tools used for financial planning?

Some of the softwares used for financial planning are MoneyGuidePro, eMoney Advisor, Advisor360, MoneyTree, eMoney Pro, WealthTrace, RightCapital, Orion Financial Planning, and eMoney Plus.

What is a Chartered Financial Planner (CFP) qualification?

The Chartered Insurance Institute confers the CFP certification to qualified planners and financial advisers. Generally, holders of the CFP title are the most knowledgeable and experienced planners or advisers.

This article is a guide to Financial Planner and its definition. We explain its roles, examples, steps, and comparison with financial advisors. You can also go through our recommended articles on corporate finance –