Knowledge Tree
financial planner
Also known as: financial planners, Financial planners
Facts (24)
Sources
Understanding Behavioral Aspects of Financial Planning and Investing financialplanningassociation.org Mar 1, 2015 13 facts
claimFinancial planners and advisers recognize that personality traits, demographic and socioeconomic factors, household characteristics, cognitive and emotional biases, and religion influence financial and investing decisions.
procedureFinancial planners should advise clients to reduce their losses and let profits grow as part of a long-term investment strategy to engage in disciplined investment management.
procedureTo avoid risk-taking bias and the anchoring effect, financial planners can assist clients by assessing their level of risk tolerance and their emotional reactions to perceived risk across a wide variety of securities or investments.
claimYeske and Buie (2014) recommend that financial planners treat specific investment accounts, such as retirement funds and college savings, as distinct "buckets" to help clients view them as long-term investments that should not be disturbed, thereby increasing the likelihood of reaching financial goals.
procedureTo overcome mental accounting bias, financial planners should advise clients to view investments based on the content of a diversified portfolio.
claimFinancial planners and advisers can help clients achieve long-term goals by recognizing and mitigating human tendencies and behaviors that interfere with financial planning.
claimFinancial planners and advisers can help clients achieve long-term goals by recognizing and reducing the influence of fundamental human tendencies and behavioral biases during the financial planning process.
procedureTo mitigate the negative impact of worry on investment decisions, financial planners should match a client’s risk tolerance with a pre-determined asset allocation strategy. If a client loses sleep due to anxiety about common stocks, planners should advise them to own more conservative securities to hold a less risky portfolio.
claimFinancial planners and advisers increasingly incorporate behavioral finance insights into their client work.
claimHoward and Yazdipour (2014) identify trust as an essential factor in retirement planning and investment management, noting that financial planners must establish a balance between trust and control in the client-adviser relationship.
procedureTo mitigate the negative effects of overconfidence and status quo bias, financial planners should implement a strategy based on a proper risk tolerance profile, a diversified asset allocation strategy using mutual funds and exchange-traded funds, and yearly portfolio rebalancing.
procedureFinancial planners should communicate the necessity of long-term diversification strategies to clients to help them achieve adequate risk reduction and expected returns, thereby overcoming sub-optimal portfolio performance caused by local and home bias.
procedureFinancial planners can overcome client resistance to annuities by reframing the investment; instead of describing the annuity as a generic monthly payment, planners should frame it as a specific resource for future spending, such as funds for purchasing a new car.
The Comprehensive Approach to Crafting a Future Financial Plan realinvestmentadvice.com Feb 3, 2025 2 facts
claimFinancial advisers or financial planners can help tailor investment strategies that address debt management and optimize asset allocation to ensure investments align with a client's overall financial goals.
claimFinancial planners evaluate a client's current financial status and identify potential risks that could impact revenue streams to help maintain financial stability in response to life changes and market fluctuations.
Risk Management & Insurance Planning - FPA Learning Center fpalearning.onefpa.org 1 fact
claimFinancial planners identify, assess, and mitigate risks by analyzing common client exposures, including health events, liability, property loss, and disability.
An Exploratory Study of the Wealthy's Investment Beliefs ... financialplanningassociation.org Mar 1, 2025 1 fact
claimThe CFP Board (2024) states that a financial planner's personal beliefs, values, and biases influence the planner–client relationship, as described in the principal knowledge topic of the psychology of financial planning.
Managing Money: Six Principles of Personal Finance schwab.com 1 fact
claimCharles Schwab & Co., Inc. does not provide tax advice and recommends that individuals consult with a qualified tax advisor, CPA, financial planner, or investment manager for specific individualized tax, legal, or investment planning advice.
Master Risk Management for Effective Financial Planning - Cohesion cohesionco.com 1 fact
procedureIndividuals should follow these steps when a major life event occurs: (1) Assess the impact of the event on financial goals, (2) Update insurance policies to align with new family responsibilities, (3) Reallocate investments based on changing income levels and expenses, (4) Consider consulting a financial planner for tailored advice, and (5) Regularly review financial plans to stay aligned with personal circumstances.
Next Generation Investment Risk Management: Putting the 'Modern ... financialplanningassociation.org 1 fact
perspectiveThe authors argue that modeling real-time rules-based rebalancing is necessary because it reflects how financial planners actually invest client portfolios, and without it, optimal portfolios are derived only by accident.
The Four Pillars of Financial Health | NASA Federal Credit Union nasafcu.com Mar 22, 2024 1 fact
claimFinancial planners can assist individuals in preparing for the future and staying on track to meet long-term financial goals.
Personal Finance: A Resource Guide guides.loc.gov 1 fact
procedureThe process of choosing a professional financial planner involves determining personal goals, researching potential candidates, checking qualifications, reading reviews, understanding fee structures, reviewing contracts, and asking for recommendations from family and friends.
What is Personal Finance? A Guide to Managing Your Money westernsouthern.com 1 fact
claimWorking with a financial planner and an attorney can assist individuals in learning about options for protecting and transferring assets, as well as advising on methods to maximize taxes on wealth both during and after their lifetime.
What Role Does Insurance Play in Financial Planning? emoneyadvisor.com Jun 27, 2024 1 fact
procedureFinancial planners should assess a client's need for life insurance by determining if the client has dependents who rely on their income, with the goal of replacing that income in the event of premature death.