The 5 W’s of Financial Planning: Do you know them?

It’s always an interesting conversation when I get to explain exactly what I do.  It often results in an educational moment about the subject and disproving what’s currently believed.  For example, when I introduce that I’m a financial planner it’s as if “investment guy” is what’s heard instead.  Don’t get me wrong, this is no fault of their own.   

In reality, there isn’t much talk about the intricacies of financial planning, nor is there much education about exactly what it is.  Due to these deficiencies, whether personally or educationally driven, millions are believing lies each day centered around personal finance and these lies are abetting half-empty lives.  

But hey, you don’t know what you don’t know, right?  As Morpheus says to Neo in the movie the Matrix, “You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe.  You take the red pill, you stay in Wonderland and I show you how deep the rabbit-hole goes.”

This leaves you in one of two places.  You can continue the rat race, spurred on by the American Dream & the Joneses next door, and disregard any notion that there is a very different reality waiting for you out there OR you can follow me on a journey down the rabbit hole to discover where personal finance and meaningful life meet.

Note:  Financial planner, advisor, and professional are all used synonymously for this post.  


Who is financial planning for?

One thing you may be thinking is that “Hey, I’m not wealthy enough for financial planning so this really doesn’t pertain to me” or “My situation isn’t complex enough for financial planning”.  False.  The beauty of financial planning is that IT IS for everyone, from students to retired folks.  Whether short or long-term goals, there is always something to plan our resources (money, time, effort, etc.) for.  Planning becomes even more pertinent when those resources are sensitive and finite.  Don’t be the person looking back and wondering “What if?” but instead the person confident in their decision making.    


What is financial planning?

The first thought that comes to mind for many is investments, which is a critical tool within many financial plans.  Although it’s a key piece of the puzzle it also isn’t the only piece.  And honestly too much emphasis is put on this arm of financial planning especially since most of it’s out of our control, it’s like planting and growing a seed.

More times than not, one or two components end up being packaged and labeled “financial planning”.  I’m here to tell you there is so much more to financial planning.

According to the Certified Financial Planner Board, they define financial planning in this manner, “…the process of determining whether and how an individual can meet life goals through the proper management of financial resources.”

Financial planning becomes pretty powerful when put that way.  It’s an art and a science intertwined with one another.  The recommendations created through strategic planning, the science, coupled with the art of listening, understanding, communicating, and sincerely feeling what the client is going through is enough to convey the value itself.

Two questions you should consistently be asking yourself:

  • What is most important to me? (You could have multiple answers)
  • Why is it important?

Financial planning aims to tackle both of these questions head on.  Because only when we have the answers to both of these questions can begin to lay a foundation.

While I’m still early in my career as a financial planner, I’m witnessing a huge shift from the emphasis on data and recommendations to managing behavior and effective communication.  Not to say the former is irrelevant or unimportant, but the former without the latter is ineffective.

It’s intended to be personal, very personal.  Hence personal financial planning.  This is evident in the full divulgence of personal financial data.  What we spend our time and money on is telling of what’s most valuable to us and allowing someone else an inside view can be invasive.  It’s also seen in the conversations that financial planners and their clients have.  They are often unlike any conversations that the clients have with others.

There aren’t duplicate diagnoses or recommendations for any two individuals or families.  Everyone’s goals should be specific to them or they aren’t dreaming big enough.  Their means and resources are also distinct to them.  Your financial plan should be as unique to your situation as your fingerprint is to your identity.


When is financial planning appropriate?

Financial planning should have been started yesterday and if that ship has sailed today is the next best option.  There is no better day than today.  The point is there should be a sense of urgency for something so important.

Contrary to popular belief, financial planning isn’t one and done.  What I mean is that there isn’t a one-time solution that will allow you to cruise control for the rest of your life.  Why is this?  Life happens.  An addition or subtraction to your family, employment changes, an ailment, re-prioritizing what’s important, and the list goes on.

Therefore, financial planning is a lot like flying a plane from one destination to another through a turbulent storm.  Very rarely is the path linear but instead a serpentine pattern.  We can’t control what’s out of our power but we can make course corrections with what we do have power over.

Much in life we are able to leave up to “chance” and end up with fair results.  However, personal finance is something that you shouldn’t even consider leaving to chance, granted you care about achieving what’s most important to you.  This could range from being able to give more of your resources away to seeking work that is more fulfilling.  These things aren’t stumbled upon by happenstance but by aspiration.  Everything you deem important is worth strategically calculating and planning for, is it not?

You shouldn’t wait lest your financial plan never come to fruition.  Seek out a qualified financial planner that has your best interest at heart, a fiduciary, or begin the process of educating yourself in the ways of financial planning.  Remember, time is the biggest asset on your side.  Time can be lost, and never regained, or it can be harnessed for your advantage.  

If you’re interested in financial planning begin researching options and how you can go about implementing it.  Be sure to set hard deadlines that are short in nature to avoid Parkinson’s Law which says “work will expand to fit the time available for it’s completion.”


Where can I find financial planning?  Where do I start?

You most definitely can embark on doing your own financial planning.  However, this will take countless hours by the time you educate yourself and implement everything on your own (remember the implementation will be ongoing as your financial situation constantly changes).  Is it possible?  Yes, I’ve seen individuals take hold of their personal finances independently. Granted, this typically comes easier for DIYers that love to learn and have a knack for personal finance.

For all others that would rather outsource it, either because it isn’t worth their time or they just downright don’t want to, there are a few options.  For most, it’s in their best interest to work with a fee-only financial planner.  This is often your best bet to work with a fiduciary planner.  A financial planner that is a fiduciary is obligated to act in your best interest.  You can find financial planners at banking institutions, insurance companies, law firms, custodians (think TD Ameritrade, Charles Schwab, Fidelity, etc.), and  independent advisory firms (these are typically your small regional & local firms).  

Be very careful when selecting a financial planner due to abounding conflicts of interest within the industry.  Many call themselves “financial professionals” or “financial advisors” because there has been much ambiguity in the financial industry within the past decades.  Not all professionals will offer the same services and value so you will want to do thorough research.  Here are some questions you may want to ask:

  • What are your conflicts of interest?
  • How are you compensated?
    • Are you fee-only?  Are you compensated by selling products?
    • Are you compensated by any other third-party individuals, firms, etc.
  • Are you a fiduciary?
  • What services do you offer?
  • What is your educational background?
  • Why do you do what you do?
  • Do you have a clean record?
    • FYI, you can check any advisor’s disciplinary record, as well as much more information about them, here.

I also want to stress that there are abundant resources available online.  We live in an age where any and all information is accessible.  That’s a good place to start in terms of searching for financial advisors or self-educating yourself.


Why is financial planning necessary?

Ever taken a vacation without strategically planning for it?  Or “play it by ear” while working on a project at work?  Of course not because you see the value of planning ahead.  Hey, I’m all for spontaneity, in the appropriate situation though.  However, I’m not willing to chance what is most important to me and my family.

Millions of Americans trek through life without a blueprint of accomplishing what’s most important to them.  It’s sad because very few ever live a truly fulfilling life centered around what’s significant to them.  They miss the mark because they fail to even set a mark.

Think of a handful of the most valuable things in your life and why they mean so much to you.  The reality is that if you don’t take the proper time to plan for them, and furthermore act on them, you will surely lose them.

Financial planning is necessary in order to eliminate unimportant waste in our lives.  The planning process uncovers our eyes so we may see what’s truly important and how we can get there.

Like I mentioned earlier, a key part of financial planning is modifying our behavior.  How can we change our behavior and decision-making to align with what we value?  To do this it often requires us to be countercultural, think of a salmon swimming upstream against the current, and may even lead to ridicule or belittlement.

It’s time to look past all the lies that have been fed to us and take back control of our lives in order that we may live with purpose.


How is financial planning conducted?

If you plan on doing your own planning the majority of your time will be used educating and equipping yourself through books, podcasts, online articles/blogs, as well as other resources.  As you educate yourself you can slowly build out your personal financial plan and implement it as you see fit.

If you land on the other end of the spectrum and want to outsource your financial planning to a professional then your chosen advisor will typically start you on a “data gathering process”.  Once they have all the data they will start creating your personalized financial plan according to your goals and dreams.  The finished project will be the jumping off point but will eventually need to be adjusted to fit your ever-changing life.

In regards to the frequency of financial planning,  Your decision of how “involved” you want your planner to be will determine which arrangement will work best for you.  Many financial planners prefer only to work on a recurring basis, an ongoing relationship. However, there are others that will work on an as-needed basis.

An as-needed basis, primarily projects and hourly work, best serves for basic Q&A, advice regarding an isolated area of your financial life, second opinions, or occasional financial check-ups.  If you aren’t quite ready to hand over the keys to your financial life this will likely suit you best.

A recurring arrangement works well for ongoing service and routine evaluation of your personal finances all while the planner is helping you implement the recommendations they make.  If you are stretched thin or afraid you won’t enact the recommendations on your own this could be a viable option for you.

One thing to clarify, as stated above, is how the planner will be compensated.  You will always want to ask this when researching and interviewing financial planners.  It’s vital that you’re aware of the exact costs it takes to employ them.

I won’t get into too much detail today, but there are two primary ways that financial professionals may be compensated and that’s through commissions or through fees.  You’ll be better off to know the difference.

Commissions (also known as sales charges) are generated through the sale of a financial product (insurance, annuities, mutual funds, etc.).  The financial professional selling the product receives a commission as a percentage of the sale, which can range from 0.25% up to 7% depending on the product.  This way of business is transactional in nature.   

The other compensation method is through the form of fees.  Currently, this is the most popular method within the industry.  Fees are generated through investment management & advisory (a flat fee or a percent of your total investments), hourly rates, projects, and retainers.  

As the industry progresses along, more and more options are being made available in an affordable manner.  Technology has been the trailblazer of DIYers to do their own financial planning while allowing financial planners to work with clients halfway around the world.  Whether you plan to do it yourself or hire it out, there are few excuses to not act now.



Planning your personal finances can be daunting and filled with uncertainty.  However, it’s necessary and it should be a priority.  Start having the conversation now with a spouse or a trusted friend.  Just like planning for your family or career, financial planning should have a place in your life as well.  Start researching your options, you’ll only empower yourself with education.  View financial planning as any other utility that is essential to daily living.  Everything important is worth planning for.

Now how about that pill, red or blue?

One thought on “The 5 W’s of Financial Planning: Do you know them?

  1. Great blog post DJ! Love the unique perspective and insight you have in addressing financial issues facing young people as both a Financial Planner and a Millennial yourself!

Leave a Reply