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The Evolution of the Financial Plan

The Evolution of the Financial Plan

It’s important to understand the components of a formal financial plan and how it has evolved.

Sponsored by Voya Financial Advisors

By Tom Halloran

A recent survey of our firm’s financial advisors found that nearly 75 percent have at least some clients with a written financial plan.1 If most individuals receiving professional financial advice see the value in a written plan, it shows that it can be a valuable tool. But, it also begs the question of what the modern-day plan entails. As your role as a financial planner has evolved immensely over the years, it’s important to understand the components of a formal financial plan and how it has evolved.

Holistic thinking. Financial plans were once framed around the question: “Will I have enough money to retire?” Today, the approach is more holistic and your clients should be asking: “What will my retirement look like?” This includes when, ideally, they’d like to retire and the lifestyle they’d like to enjoy in retirement.

Today, however, even the definition of “retirement” is evolving. For some, retirement could mean working part-time during the transition or taking on an “encore career.” For others, goals like financial support for their children or grandchildren, caring for aging parents or creating a legacy might take priority. Today’s plan should address the shift from accumulating retirement income to achieving financial independence and maintaining the lifestyle your clients want. To help provide a comprehensive strategy, remember to leverage your support network of accountants or lawyers to consider taxes, wills, or trusts in connection with a plan.

Advancing technology.  As the planning industry matures to address these holistic needs, so does the technology it relies upon. Financial planning is no longer a “one and done” activity, it’s become much more interactive, dynamic and conversational. Planning tools have moved beyond paper statements and stagnant budgets to digital, living plans that can be updated or even completely revamped. This creates greater organization and a more collaborative relationship with your clients. Many planning tools also help provide an informed outlook for the future, allowing you to set attainable goals for your clients and implement the right plan.

Remember, plans can be impacted by things like significant life events, changes in the economy or health issues. Even with technology, regular reviews with your clients can ensure their plan is on track.

Personalization. For years, the “classic” financial plan was based on financial priorities and objectives that could apply to most people, including things like establishing an emergency fund, obtaining health and life insurance and saving for retirement. While these are still relevant, today there is no one-size-fits-all approach. Plans should be shaped around your client’s household structure and unique family needs.

In recent years, the “modern” American family has expanded to include blended families, single-parent and multigenerational households and so on. With this evolving culture, today’s plan calls for new strategies and customized solutions. For example, Voya Financial Advisors’ survey also found nearly half (48%) of our advisors serve clients with a connection to the special-needs community,1 and this group faces many unique planning considerations. Even with significant advances in education and early intervention, if your client has a child with special needs or a disability, they’ll need to account for some level of support when creating a long-term plan — such as caregiving services, housing or transportation.

A holistic financial plan can provide a blueprint for one’s financial future, but helping to grow and retain it takes discipline and a commitment to evaluation over time. The modern financial plan grows and adjusts with your client throughout their life.

Tom Halloran is President of Voya Financial’s retail wealth management firm, Voya Financial Advisors, Inc. 

Investment adviser representative and registered representative of, and securities and investment advisory services offered through, Voya Financial Advisors, Inc. (member SIPC).

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1. Online survey of 661 Voya Financial Advisors, Inc., advisors. Voya Consumer Insights & Research, Jan. 2018.


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