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Comprehensive Advice is the Foundation for Scaled Advice

Jae young Yang - CFP Koreaby Jaeyoung Yang, CFP

Financial planning is a process that establishes a necessary financial goal for each stage of life and implements successive actions to achieve it, so that one can live a fulfilling life without financial difficulties. Most people want scaled financial planning in a particular scope such as investment planning, retirement planning, estate planning, etc.

Scaled planning achieves a financial objective necessary in a particular point of life, rather than holistic financial planning which is carried out over the entire span of the client’s life. In addition, many financial planners engage in scaled advice to satisfy a client’s needs.

The fundamental purpose of financial planning goes beyond conducting financial planning in a limited scope such as financial goal planning for a particular phase of life. It spans over to the engagement of successive holistic financial planning to organically correlate financial objectives necessary for the entire span of the client’s life. This is not to say, of course, that scaled advice is not financial planning. Rather, scaled advice should also take into account a holistic approach.

Business Friendships Make Holistic Planning Plausible

A financial planner has to have varied knowledge and work experience necessary for holistic financial planning. As financial planners have their own focuses based on their majors and work experience, they tend to provide scaled advice in a scope they feel confident in. However, if they want to exercise their competence as a financial planner and give clients more satisfaction, thereby attracting a larger clientele, they have to make a further effort to use holistic financial planning. With respect to an area they have shortfalls in, they can work together with other financial experts to ultimately provide better service to their clients, and such an effort is very important. There are many CFP professionals who are also CPA’s, lawyers, investment professionals, etc., and thus, keeping a close contact with them is another plausible approach.

The Difference Between Can and Should

CFP professionals may have a different perspective from a financial planner whom is also a CPA, a lawyer, an investment professional, and so on. I, personally, was engaging in CPA work with a license before obtaining my CFP certification. Since I became a CFP professional, my perspective has changed to a certain degree. I am most confident in tax and estate planning, which are my staple financial planning fields. Of course, a CPA can engage in estate planning without knowing much about financial planning. However, he or she is very likely to provide estate planning, with a bias towards tax saving. If I did not have knowledge or work experience in financial planning, I would most likely focus on tax saving strategies.

Even though tax-saving measures are important for estate planning, they are not the most important focus when implementing financial planning. More important are the ways of allocating inheritance property to the descendants and helping the client live a better life. In other words, the whole purpose of inheritance tax saving is to hand down more property to them. Even so, most clients desire to see their children make more wealth through inheritance and they want to ensure that there are no conflicts that arise over the property inheritance.

Estate Planning From a Financial Planner’s Perspective

Therefore, what is more important than mere tax saving measures in conducting estate planning, is an allocation of inheritance property. The allocation is not a CPA’s or a lawyer’s exclusive job. CFP professionals can do the allocation in a more appropriate way, by arranging gifts inter vivos or by creating a will with aid from appropriate experts, that works out investment, insurance, and retirement planning for the descendants receiving the inheritance.

When a CFP professional engages in estate planning without a lawyer or CPA license, I believe they should reconsider and work with a professional who has such a license. Another thing I would like to stress is that one ought to be aware of the fact that estate planning is the beginning of a new financial planning market. CFP professionals can create a new clientele through estate planning and, for this to happen, they have to educate themselves in other scopes of financial planning. Otherwise, they ought to maintain an uninterrupted network with other CFP professionals who are educated in these necessary areas.

While engaging in the scaled financial planning that a planner feels most confident in, CFP professionals should accumulate more knowledge and experience if they want to keep holistic financial planning in mind. This enables them to give clients more satisfaction and creates the opportunity of a bigger clientele.

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