5 Reasons Why Financial Planning is Important

Apr 30, 2024

A financial plan may seem like an extraneous addition to an investment portfolio, nothing more than a nice-to-have bonus. In reality, financial planning is important for building a secure future and offering unmatched clarity on your financial standing.

Not everyone offers planning services, but at Credent, we believe in the powerful combination of service, investments, and planning.  

With a plan, clients find the confidence to enjoy life, feel secure amid challenges, and take bold action to achieve their goals.  

If you don’t already have one, here are five reasons you need a financial plan: 

1. Plans create clarity & accountability

A plan organizes your financial life, maps out your future and how long your money will last, and demonstrates the impact of what-if scenarios. 

Cerulli, an industry research group, notes that “[f]inancial planning is a time-intensive exercise, requiring an advisor to conduct deep fact-finding conversations with clients, while simultaneously learning their assets, liabilities, and ideal outcomes.” ¹

Outside Credent, not all advisors prioritize this attention to detail, but it’s the details that help clients know where they stand.    

Sometimes, a plan will reveal gaps and room for improvement. Ultimately, financial freedom is a process, and a plan offers the clarity and accountability needed to get on track.  

We’ve seen a couple go from struggling with their plan to prioritizing the advice they’ve received and achieving a rock-solid, successful outcome. One client got out of debt, opening new opportunities, and others have committed to accumulating assets early in their career, working toward a secure retirement. 

2. Plans help you enjoy the resources you have

Fear can stop anyone from achieving their goals and enjoying life, but once you know you have what you need to do what you’ve always wanted, a new world opens up.   

Through her financial plan, we showed one client that, even accounting for long-term care expenses, she had the resources now to enjoy life and leave a legacy. This permission was transformative, allowing her to experience a new-found freedom.  

Even those who aren’t concerned about their resources can benefit from using a plan to know the best way to give back to the organizations they care about.  

Plans aren’t traps to keep you stuck. They are tools to help you steward and make the most of your life. 

3. Plans allow you to pivot quickly

Clients continually face life-changing circumstances – a diagnosis, a new calling, a loss – but without a financial plan, it’s hard to know if and how to pivot.  

With the backing of a plan, we’ve had clients leave the workforce to volunteer more, help ailing family members, or spend more time with loved ones. 

Additionally, after a medical diagnosis, we helped a couple shift their plan’s focus from travel and fun to asset protection and preparing for the future.  

With a plan, we can test the what-ifs, answer the looming questions, or move quickly to account for a new goal, a new challenge, or a new opportunity.  

4. Plans let you confidently support loved ones

Clients who must account for their own security and the security of a loved one benefit from a personalized plan that considers everyone’s needs. 

For example, clients with a child with special needs were able to plan a retirement for three people instead of two. 

In addition, some clients want to be comfortable giving money to their families and charitable causes now. Others want to leave a specific amount behind. With a financial plan, it’s possible to map these goals and make them a reality.  

5. Plans offer the assurance that you’ll be okay

While financial plans are inherently logical, they are also emotional, easing worries and offering reassurance.  

One client affected by the 2008 crisis spent decades unsure he and his family would be okay. Another client worked hard for years but never took the time to know if he could retire. Another was unconvinced that she was secure.  

With the evidence of a plan, our team could look at each of these hardworking Americans and assure them, “You are going to be okay.”  

Why Financial Planning is Important

When it comes to your finances, don’t settle for “I don’t know.” 

“I don’t know if I have enough money for retirement.”  

“I don’t know the best way to give back.”  

“I don’t know what I can afford.”  

“I don’t know if my family is secure.” 

“I don’t know if I made the right choice.” 

“I don’t know if I’ll be okay.” 

With a well-built, dynamic plan, you can navigate life’s most important financial events with clarity, enjoyment, and confidence.  

If you’d like to talk to an advisor about your financial plan, fill out the form below.  

  1. Cerulli Associates, “The Cerulli Report U.S. RIA Marketplace 2021: Meeting the Demand for Advice,” 2022, https://www.cerulli.com/research, 140.  

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