Principles of financial planning

A carefully-crafted and comprehensive financial plan provides a roadmap to financial security, allowing your goals to work in tandem rather than at odds with each other.

The day-to-day demands of work, family, and life can at times be overwhelming and cause you to lose sight of your long-term goals. At other times, your financial goals may come into conflict—competing against each other for both your attention and resources. That’s why financial planning is so important.

It may sound daunting or time-consuming, but the process itself is simple and straightforward. And it helps you align each of your goals with sound financial tactics designed to markedly improve your likelihood of success. From retirement planning to education planning, and asset protection to estate planning, a well-crafted financial plan can help keep you on track toward:

  • Meeting all your interrelated goals from your working years through retirement
  • Minimizing the impact of taxes on your savings
  • Funding educational costs for your children or grandchildren
  • Building a cash reserve to meet emergency needs
  • Providing for your family in the event of your death or disability
  • Reducing taxes on lifetime gifts and estate transfers
  • Ensuring the orderly transfer or sale of a family business
  • Establishing a discipline to your investment strategy that aligns with your goals

Common questions and concerns

1. What is financial planning?

Financial planning is the process of articulating and defining personal and financial goals and formulating a comprehensive, integrated strategy to achieve them without the assumption of undue risk. The process includes four distinct steps:

  1. Information gathering (such as life goals, assets, liabilities, cash inflows and outflows, investment preferences) and analysis
  2. Plan development (aligning resources to short- and long-term goals)
  3. Plan implementation
  4. Plan monitoring, periodic review, and adjustment

2. What areas are typically covered in a financial plan?

A comprehensive financial plan will generally address most or all of the following topics: retirement planning, investment planning, educational funding, income tax planning, estate planning, risk management, and insurance planning.

3. What’s involved in the retirement planning process?

At its core, retirement planning is about striving to ensure that you never run out of money, whether from living longer than expected, market downturns, or spending too much too fast. The process helps you estimate how much you’ll need to cover your essential and discretionary expenses in retirement. It can also identify income sources to fund those various expenses, and determine the most tax-efficient way to liquidate assets from multiple accounts to generate sufficient income. These decisions will be based on a number of factors, including:

  • What retirement means to you—is it a chance at a second career or a life at the beach?
  • What are your travel plans and other general lifestyle goals, such as a second home?
  • At what age do you want to retire? How much income do you want available to you in retirement?
  • Do you envision any impediments or have any fears about achieving your goals?
  • How long do you expect to be retired? Is your family history one of longevity? How is your general health?
  • If you own a business, will it be sold during retirement? Will you receive income from it or need to fund expenses for it?
  • Is it important to you to pass wealth to your heirs? To charities?

The discussion generated by these and other questions will paint a picture of your unique retirement. It’ll help identify obstacles and provide a realistic framework for the best solutions to meet your goals.

4. What is investment planning?

Your financial plan will compare your existing investment holdings (asset class, liquidity, risk, diversification, and tax consequences) against alternative strategies as part of a coordinated approach—all designed to meet your financial goals in a manner consistent with your risk tolerance and the rate of return needed to fund your goals.

5. What is income tax planning?

Income tax planning encompasses a lot more than just filing personal or business tax returns. Typically, the goal is to reduce, postpone, eliminate, and/or convert federal and state tax liability on both compensation and investments—or change the tax ramifications to a more favorable rate structure. Some of the techniques available to accomplish these objectives include:

  • Funding retirement accounts (traditional IRAs, Roth IRAs, SEP, Keogh, 401(k), pension, and profit-sharing plans)
  • Transferring assets to individuals in a lower income tax bracket (custodial accounts, Coverdell Education Savings Accounts, and 529 plans)
  • Holding capital assets for the favorable long-term capital gain holding period (a year and a day or longer prior to sale).

6. What is estate planning?

The purpose of estate planning is to make sure your assets are distributed upon your death in a manner consistent with your wishes and in a manner that minimizes tax obligations. Usually this is accomplished through provisions in your will that direct the transfer of estate assets to your heirs. Sometimes, one or more trusts may be established as part of your estate plan to help facilitate the transfer of assets. These trust vehicles can provide added flexibility as to how and when beneficiaries receive assets.

A properly drafted will also designates the entity and/or person who will manage your estate (executor, executrix, administrator, or personal representative) and any trusts established thereunder. A guardian for minor children and the orderly continuation or sale of a family business may also be addressed during the estate planning process.

An estate planning analysis will address methods designed to reduce taxes and probate costs, and provide for estate liquidity, survivors’ income needs, and any charitable desires. A sound estate plan should include living wills and durable powers of attorney for both financial and healthcare needs.


A comprehensive financial plan is your roadmap to a successful financial future. As with any course, there are bound to be detours along the way. Over the years, your life will inevitably change and evolve. Your marital status may change, or you may switch careers or be unable to work. Market returns may fluctuate, or inflation may lower the value of what you’ve already saved. Events like these will require you not only to reevaluate your needs, but also to adjust your financial plan to ensure continued progress toward your retirement goals. Consider talking to a Truist Premier Banker about planning for your retirement.

Financial planning and consultative support with a Premier Banker, requires $250,000 or more in assets.