Here at Thinking Big, we practice Financial Life Planning (FLP). If you’ve never heard of it, you’re not alone; especially because we more often refer to our work by another name, “Holistic Financial Planning.” But the two are one in the same. FLP is a newer, more complete way to approach and determine how money functions in your life.  

Our profession is relatively young—only about 50 years old—and it’s constantly evolving. So its definition is ripe for disagreements within the financial planning profession. In fact,  both Jim and I recently took a graduate course that was titled, “Introduction to Financial Life Planning,” led by leading practitioners in the field; the entire course was essentially one long discussion on how to define Financial Life Planning and differentiate it from Traditional Financial Planning (TFP).

You may be working with a financial life planner or a more “traditional” financial planner. In this post, I’ll give you a snapshot into the history of financial planning, talk about the differences in philosophies between FLP and TFP, and then tell you more about how Thinking Big defines and approaches FLP.

How Did We Get Here?

Traditional Financial Planning refers to the approach that began in 1969 when 13 people (notably, all men) gathered in Chicago to outline a framework for a new profession that would integrate separate parts of the financial services industry (like insurance and investments). Since its inception, TFP has been tied to selling products and making commissions off said products. It also leans more toward technical number-crunching and  investment management, focusing on rate of return and  investment performance (think: lots of charts and graphs). Many firms today still use the traditional approach because their business model is still tied to selling products and making commission off said products.

As the role of the financial planner evolved, the new movement of Financial Life Planning began to emerge. The financial planner became less and less of a product vendor, and more of a trusted advisor.  This evolution is rooted in a sense of responsibility to the client. Financial planners began to realize that the profession needed a more integrated, humanistic approach. They recognized that people aren’t rational regarding financial decisions, but rather are emotional and conflicted. Moreover, people have unique dreams, beliefs, and backgrounds that inform their financial circumstances—and can’t be captured in charts or graphs. 

Evolving Past Tradition Life Planning

Traditional Financial Planning has historically been focused on the future, which is why so many people associate the notion of financial planning with retirement planning. TFP prioritizes building and protecting wealth over an individual’s unique life circumstances and goals. In practice, TFP involves more technical analysis and can be quite rigid. Key focus areas—like investment management, taxes, estate planning, and cash flow—are standardized checklist items. Traditional financial planners often concentrate on what’s happening with the money rather than in the life of the person.  

Financial Life Planning has evolved from TFP to honor the reality  that life is ever-changing and includes both physical and spiritual needs. Done well, FLP builds bridges between clients’ intentions and their potential reality, all within the context of their spiritual, mental, behavioral, financial, cultural, and social realities. A financial life planner helps clients navigate the inherent tension between what they need and want today versus what they will need and want in the future.

My favorite definition of FLP comes from Stephen Brody’s article in the Journal of Financial Planning:

“[It] is a process that seeks the development of the whole person. It … leads to the understanding of one’s meaning, purpose, and moral framework of relating with self and others. Based on that understanding, a utilization of resources plan is co-created to include money and human capital, which is aligned with the client’s vision of their ideal self and life. Lastly, it provides a framework to support the ebbs and flows of life, changes in resources, and the evolving nature of being human.”

Stephen Brody, Journal of Financial Planning

Note the last sentence of that definition, which speaks to constant change. Traditional life planning has historically treated the financial plan as more of a static checklist, whereas FLP is a more flexible and open approach that honors the ever-changing nature of human life.

Our Approach to Financial Life Planning

We share in Elizabeth Jetton, M.Ed, CFP®’s framing that financial life planners “deliver planning, not plans.” We are active “thinking partners”  to our clients, helping them make financial decisions through all the twists and turns of life.

Our approach to FLP also aims to address the full weight of managing money as both a 21st-century survival skill and a means to self-actualization. Virtually every human has to address the core issues of personal finance. As philosopher Jacob Needleman puts it, “The problem of money dogs our steps throughout the whole of our lives, exerting a pressure that, in its way, is as powerful and insistent as any other problem of human existence.” 

We know money can’t be managed well in a piecemeal fashion, e.g. focusing just on investment performance. Money is something onto which we imprint our values while it simultaneously affects our physical livelihood. One of the most valuable things we do is help our clients learn to use their money as a bridge between their authentic intentions and their physical reality.

Hopefully this provides some clarity on how to define FLP and understanding its place within the broader financial planning profession. While I talk about FLP in a more philosophical way in this post, I’ve previously explained how our financial planning process looks in practice. For a deeper dive into the meaning of Financial Life Planning, check out this article by Elizabeth Jetton, M.Ed, CFP®, which thoroughly explains how we’ve moved as a profession from TFP to FLP, and is the inspiration behind this post.