Arrow Icon
blog header pale blue image blog header abstract shape

Heart of Advice

Insights and best practices for successful financial planning engagement

left arrow Back to All Articles

Establishing a Financial Planning Philosophy

Joe Buhrmann February 15, 2024

Female advisor sharing her financial planning philosophy with a mature female client.

Many advisors have a documented investment policy or philosophy—a set of beliefs and principles that guide their investment decision-making process. They share it with their clients to ensure alignment in both sides’ approach to investing. What is less common is having a specifically stated financial planning philosophy.

Much as an investment philosophy helps advisors find clients with a shared belief system, devising a financial planning philosophy will help prospective clients get to know you and what they can expect when engaging your services.

Because the financial planning process is not a once-and-done event, having a financial planning philosophy can provide steady guidance to you and your clients for years, and even generations, to come.

Creating a Financial Planning Philosophy to Check Your Process

Your financial planning philosophy will come into play the most during steps four and five of the CFP Board’s seven-step financial planning process—Developing (4) and Presenting (5) the Financial Planning Recommendation(s).

Financial professionals need to recognize their own biases and tendencies before addressing a client’s. Creating a planning philosophy will help surface your personal beliefs, biases, and guiding principles when it comes to the financial recommendations you will make to clients.

Let’s look at the example of confirmation bias—our tendency to seek evidence that supports our beliefs while ignoring or failing to notice evidence that challenges those beliefs. Don’t develop an initial recommendation and then search only for evidence to confirm it. As an advisor, look for data on both sides of an issue, play devil’s advocate with your recommendations, and model it to reflect an open-minded approach.

As part of a financial planning philosophy, this willingness to explore all sides of an issue might be articulated as “offering objectivity.” By documenting your philosophy and stating it for public consumption, you will be telling your clients a lot about what it will be like to work with you.

Approaches to Devising a Financial Planning Philosophy

To start the process of capturing your financial planning philosophy, think about your value proposition. Does it center around the advice you are giving or is it focused more on a product or solution you are offering?

In my work with all types of advisors, I find that many say that their value proposition is the advice they are giving—the planning experience they are providing. There’s no right or wrong answer here so let’s take a look at examples of both.

Product or Solution-focused Financial Planning Philosophy

In the case of a solution or product-focused philosophy, you will be stating some high-level principles—especially if they set you apart from more universally accepted practices. Some examples of this include:

  • A preference for active or passive investment
  • Favoring using cash-value life insurance and guaranteed income solutions
  • Whether debt should be used to help build wealth or should be avoided
  • The level of aggressiveness for tax strategies

While there are aspects of these that feel like they would be more at home as part of an investment philosophy, they will absolutely have an impact on the financial planning recommendations you are making to clients. It can be polarizing when advisors and clients differ in their approaches to meeting financial planning goals. Acknowledging your preferences will help in the process of connecting with clients who share the same preferences.

Service or Advice-focused Financial Planning Philosophy

If you truly embrace the service or advice you give your clients as your differentiator, use your financial planning philosophy as a way to explicitly communicate the details of how you are different. The challenge with capturing this type of philosophy is that it can feel less tangible. Get started by creating a description of your approach to financial planning and break it down to key elements that could include:

A holistic approach. Do you offer holistic financial planning where you consider all aspects of your clients’ personal and financial circumstances to determine the actions needed to meet their goals? Stating this will help your clients understand that you will want to talk to them about more than their finances.

Using financial psychology. Going deeper into holistic planning often means applying the practices of financial psychology to find the right solutions for clients. Use your financial planning philosophy to share the ways you employ financial psychology in your practice.

Embracing simplicity. If you believe progress is the benchmark for client success, then simplicity can be a key driver. When clients understand their plan and what’s needed to achieve their goals, they are more likely to be fully engaged and complete the recommended behaviors.

Staying open-minded and flexible. Building on an understanding of the biases and tendencies that impact your clients’ financial decisions, commit to remaining open-minded about recognizing your own biases. This understanding will allow you to remain impartial when a client’s needs don’t necessarily mesh with your personal beliefs.

When it comes to flexibility, keep in mind that your philosophy will likely evolve and change over time. Things that were once on the fringes—such as alternatives, hedge funds, private equity, and even crypto have become much more mainstream.

While you’ll probably have some core pillars to your philosophy, you’ll probably find that it will grow and adapt over time—much like your clients’ plans and the lives you’re helping them build.

These approaches—product-oriented or service-oriented—to devising a financial planning philosophy are not mutually exclusive. There is no reason you can’t have a philosophy that embraces elements of both. The key is to capture it for the benefit of your firm and clients the same way clarifying your investment philosophy, niches, and fees does.

Your Philosophy Is the Foundation of Your Planning

Outlining and sharing your financial planning philosophy provides a means of differentiating your practice from the competition. It’s an opportunity to delve into the details of what it will be like to work with you.

Sharing it on your website not only gives prospects a way to start getting to know you, but it also provides talking points for initial interactions. Ask if they are aware of your financial planning philosophy and if they are, dig deeper into the aspects of it that drew them in.

Your philosophy can also serve as a jumping-off point for other business development efforts like blog posts or speaking engagements. It’s a tool that does so much more than eliminate the friction that can result when your financial planning beliefs don’t mesh with a potential client’s.

If you’re a portfolio or investment manager who’s been thinking about adding financial planning to your services, establishing a financial planning philosophy is a great place to start. To learn more about the benefits of adding financial planning to your service offering, read our eBook: From Portfolio Manager to Financial Planner, Using the Data You Have to Evolve Your Business and Client Relationships.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

Image of Joe Buhrmann
About the Author

Joe serves as a Senior Financial Planning Practice Management Consultant at eMoney Advisor. With more than three decades in the financial services industry, Joe aligns his know-how and passion to help firms of all sizes increase usage, adoption, and engagement through a modern financial planning experience. He leverages his expertise and supports internal departments across the enterprise, helping Communications, Marketing, Relationship Management, and Sales. Joe attended Illinois State University, where he received his bachelor’s degree in Applied Computer Science and his MBA.

You may also be interested in...

empowered client shopping with mobile client portal

Empowering Financial Wellness: How Client Portals Reduce Financial Anxiety and Transform Client Relationships

Feelings of financial insecurity have surged to an all-time high among Americans, with one-third (33 percent) reporting that they do… Read More

A financial advisor holding a review meeting with clients.

Optimize Client Reviews with Technology and Finpsych

Mid-year and annual reviews are common deliverables in any financial professional’s service calendar. Regular reviews are critical because financial planning… Read More

value of financial planning

How to Illustrate the Value of Financial Planning

Has a prospect ever asked you, “What is the true value of financial planning?” It’s a common question, and it… Read More

eBook: The New Advisor Value Proposition

Download our latest eBook and learn how top advisors are combining Fintech and FinPsych for superior client outcomes.

Download Now

Sign up to have the most popular Heart of Advice posts delivered to your inbox monthly.

Heart of Advice by eMoney Advisors

Welcome to
Heart of Advice

a new source of expert insights for
financial professionals.

Get Started

Tips specific to the eMoney platform can be found in
the eMoney
application, under Help, eMoney Advisor Blog.