FINANCIAL PLANNING-AICPA

Financial planning is the process of setting financial goals and objectives during life, designing
strategies to achieve them, and monitoring progress toward achieving them. Financial planning includes
investment planning, college planning, insurance planning and risk management, employee
benefits planning, retirement planning, income tax planning, and estate planning. This publication
addresses each of these areas of financial planning and gives special emphasis to estate planning.
Estate planning is setting goals and objectives and developing strategies for disposing of assets
and providing for family members, friends, and charities at death. Estate planning is a part
of financial planning because estate planning goals, objectives, and strategies affect the financial
planning process during life.
Although people often think of estate planning as being important for the wealthy, anyone who
owns property or has money has an estate. Estate planning includes more than tax implications.
The federal and state governments regulate the use of property. However, generally the property
owner decides what to do with the property—whether to keep it, sell it, exchange it, or give it away.
The property owner may devise or bequeath the property upon his or her death or allow the state
to determine the property's disposition under state law. Asset protection planning, regardless of tax
issues, is an important element of financial planning.
Although a financial planner may concentrate in one of the highly interrelated areas of financial
planning, the financial planner needs a working knowledge of all areas. The goals of financial planning
include avoiding potential problems and fulfilling the client's wishes. Financial planning is an
art because it is a skill obtained by study and experience.
Investment planning includes developing investment strategies. These strategies could include
designing a systematic investment plan and developing an asset allocation strategy. Investment
planning is a major part of retirement planning. College planning includes saving and investing for
future college costs of the client's children or other family members. Insurance planning and risk
management include analysis and evaluation of risks, choosing which risks to insure, and obtaining
the right kind of insurance to protect against such risks. Life insurance is often a major part of estate
planning. Employee benefits planning includes the evaluation of group insurance plans, employee
stock options, and other employee benefit programs. The financial planner should consider income
taxes and estate taxes in developing employee benefit plans, investment plans, insurance plans,
and retirement plans. Some strategies require the planner to consider tradeoffs between income
taxes and estate and gift taxes.

Financial planning requires the client to make value judgments. The individual's personal investment
philosophy toward potential returns and risks is an important consideration in making
these value judgments. The individual must also consider family, emotional, and religious considerations.
The financial planner should be careful not to impose his or her values, philosophy,
or personal feelings upon the client. The role of the financial planner is to inform the client about
alternative financial strategies and the potential consequences of those strategies