How Financial Planning Will Lead to More Business

It has been said, “Making money and keeping money are two different skills.” Another colloquial expression is: “Money talks: it says goodbye”. You’ve heard the stories of professional athletes who ran into financial trouble and lottery winners who went bankrupt. When things are going well, too many people think that money comes from a fountain that never runs dry. People need help to keep their money, lower their taxes and build wealth.

Accountants are often associated with filing tax returns. They take data from past events like money earned, donations made, and taxes paid up front, then organize and report it to legitimately minimize the client’s tax bill. Financial planning is an exercise in examining and preparing for the future. You are planning things that are currently unknown. Although you know what the weather was like on Christmas Day last year, you don’t know what the weather will be like on Christmas Day three years from now. However, you know that the weather works in cycles and there is a high probability that it will be in a range.

Financial planning has value. Clients might consider filing a tax return as an annual transaction. You pay a fee, the task is completed, and you pay no more until the task is repeated. Financial planning is a process. Professional athletes may be naturally gifted, but they work with coaches to develop their talent and bring them into the big leagues. They continue to work with coaches thereafter. In other words, your client may be naturally good at making money, but they need a financial coach to help them keep it and grow that money.

What are the main building blocks of financial planning?

Financial planning helps your client develop a strategy to help them achieve their short and long term goals. When you have a long time horizon, a modest rate of return can add up to substantial wealth over time. Investopedia notes that if you contribute $6,000 annually to an Individual Retirement Account (IRA) for 50 years, you would accumulate about $3.7 million if you had an 8% rate of return.

I would consider the following activities to be the main areas of interest for financial planners. Each responds to a customer need that can be billed either by the hour or by the defined activity, with additional billing for future review meetings. They are the following:

  • Retirement planning. This involves planning for the accumulation of sufficient assets that can provide income for a desired standard of living in retirement in combination with defined benefit income streams, such as Social Security. An IRA and 401(k) can build wealth using pre-tax dollars, while other investments can be made in taxable accounts. The process involves projecting the results on the basis of probabilities, often referred to as Monte Carlo analysis. Retirement planning turns into budgeting after the client retires.
  • Educational planning. Saving for a college education was once a major goal for baby boomers when planning for their children’s future. “College” was considered a four-year expense; then their child entered the world of work. Today, educational expenditure can begin at preschool and continue into postgraduate studies. Like retirement planning, it is an exercise that the client “must get right” or it will cost him later.
  • Estate planning. You’ve heard the expression “more money, more problems”. Property taxes are charged at the federal and state level. Where you live and die impacts how much money you ultimately owe. Although you can’t take it with you, most people want to maximize the amount of money they pass on to their heirs.

Then there are other areas of financial planning that may need special attention:

  • Liability management. The amount you owe, what it costs you to incur debt, and the tax deductibility of interest are additional aspects of financial planning. If your client has variable rate debt in a rising interest rate environment, it can become more and more expensive.
  • Risk management. It has often been said that life insurance buys peace of mind. For young families, income replacement is a problem if one of the breadwinners dies prematurely. Having good replacement value coverage for their home and its contents is also a problem in the event of a disaster.
  • Children with special needs. Most people expect their children to go to school, graduate, enter the workforce, and start families of their own. In some cases, they may have a child who will remain dependent for medical reasons. Parents are capable of caring for their child during their lifetime, but they must make provisions for when they are no longer in the picture.
  • Health care. Guests must take out health insurance. It can be an increasing expense, exceeding the rate of inflation. Customers need help understanding the coverage they need and the costs.
  • Budgeting. Financial planning can be customized to meet many needs, but day-to-day life often comes down to knowing which bills need to be paid and when. Clients need to learn how budgeting works, how to stick to budgets, and how to prepare for financial emergencies.


Once your client understands they need these services, you’ll likely provide financial planning as a bundled service or only provide the specific segments they choose. You can use a paid model only, which means you are developing a plan that is portable. They can implement your advice on their own or through a financial advisor. Your accounting practice could also extend to the direct provision of investment services, which could be based on a pricing model based on assets under management. The second option would move away from a fiduciary approach, since you are also the provider of the investments. Many customers who think you have their best interests in mind will be comfortable with this pricing model. This generates recurring revenue and eliminates the need to charge for financial planning services on an hourly basis.

As an accounting professional, two advantages you bring to the table are your experience and your advice. You must be comfortable with the concept that your advice is valuable and should not be given for free, because you consider the solution to be obvious. Common sense is not common.

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