Principles of financial planning

Financial planning

A roadmap to reaching your greatest potential. A framework for decision making. A way to get your goals working with rather than against each other. That’s the power of a carefully crafted and comprehensive financial plan.

The planning process itself is simple and straight-forward. It aligns each of your goals with sound financial strategies and tactics designed to achieve success with as little investment risk as necessary. From retirement planning to education planning, asset protection to estate planning, a well-crafted plan can help:

  • Coordinate all your interrelated goals from your working years through retirement;
  • Minimize the impact of taxes on your savings;
  • Fund educational costs for children and grandchildren;
  • Build a cash reserve to meet emergency needs;
  • Provide for your family in the event of your death or disability;
  • Reduce taxes on lifetime gifts and estate transfers;
  • Ensure the orderly transfer or sale of a family business; and
  • Establish a disciplined investment strategy that aligns with your goals.

Common Questions

1. What is financial planning?

At it’s core, financial planning is the process of clarifying, quantifying, and prioritizing your personal and financial goals—and then developing a thoughtful strategy to achieve each of them without taking on undue risk. The process involves four distinct steps:

  • Information gathering (i.e., life goals, assets, liabilities, cash inflows and outflows, investment preferences, etc.) and analysis
  • Plan development; aligning resources to short- and long-term goals
  • Plan implementation
  • 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 does the retirement planning process entail?

Retirement planning is about both trying to save enough before you retire, and carefully managing the draw-down of your assets during retirement so you never run out of money. The process helps you estimate how much you’ll need to cover your needs, wants and wishes in retirement; identify income sources to fund those various expenses; and determine the most tax-efficient way to liquidate assets from multiple accounts to generate enough income. These decisions will be based on: 

  • 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 issues (second home, etc.)?
  • At what age do you want to retire? How much income do you want available to you in retirement? How would you feel if you were unable to retire at that age?
  • 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 you support?

The discussion generated by these and other questions will provide a visual image (“paint the picture”) of your unique retirement. It will help identify any obstacles and provide a realistic framework for the best solutions to meet your goals.

4. What is investment planning?

Part of the financial planning process involves reviewing your existing investment holdings (asset classes, liquidity, risk, diversification and tax consequences). We’ll compare those investments with alternative strategies to identify the optimal investment mix that will provide an expected rate of return that will fund your goals within an acceptable level of risk.

5. What is income tax planning?

Typically, the goal is to reduce, postpone, eliminate and/or convert federal and state tax liability on both income and capital gains (or change the tax ramifications to a more favorable rate structure). Some of the techniques we may explore together include maximizing retirement accounts (employer plans, Traditional, Roth and SEP IRAs, etc.), transferring assets to individuals in lower tax brackets (529 plans, custodial accounts, Coverdell Education Savings accounts) and/or holding capital assets for the favorable long-term capital gain holding period (at least a year and a day prior to sale).

6. What is estate planning?

Want to make sure your assets are distributed according to your wishes and in a way that minimizes the tax obligations of your beneficiaries? This can partially be accomplished with provisions in your will that direct the transfer of estate assets to your heirs. But you may also want to consider establishing one or more trusts to help facilitate the transfer of assets as part of your estate plan. These trusts can provide added flexibility as to how and when beneficiaries receive assets.

A properly drafted will also designates who’s responsible for managing your estate (executor, executrix, administrator or personal representative) and any trusts you’ve set up. A guardian for your minor children and provisions for the continuation or sale of a family business may also be addressed during the estate planning process.

Ultimately, the goal is to reduce taxes and probate costs, provide for estate liquidity, survivors’ income needs and any charitable desires. A sound estate plan should also include living wills and durable powers of attorney for both financial and health care needs.


A comprehensive financial plan is your guide to a more confident future. Created thoughtfully, it becomes a living, breathing document that can be easily adjusted and modified as your life evolves and circumstances change.

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 to adjust your financial plan to ensure continued progress towards your retirement goals.

Powered by our collaborative financial planning platform, your Truist Wealth advisor will work closely with you to navigate new and unexpected financial challenges, address your most pressing retirement questions and concerns, and help keep you on track toward meeting your particular goals.

Interested in learning more about the financial planning process?

Talk to your Truist Wealth advisor.