Strategic Planning Vs. Financial Planning


Strategic planning is a business planning process that involves charting the course of the given organization and preparing it for the future events based on its vision, mission and current state. Financial planning entails planning for sufficient cash flow to accomplish future goals. The term “financial planning” is generally used in relation to personal financial planning rather than business planning.


The purpose of strategic planning is to establish the direction of the organization and to set goals that are aligned with the organization’s core values and competencies. Implementation is ensured by creating an outline of how and when the set goals will be accomplished and determining who within the organization will implement various tasks. The purpose of financial planning is to determine how clients can accumulate enough money to achieve their goals, such as: having a comfortable retirement, funding their children’s education, going on a trip or securing their current lifestyle.


The common objectives of strategic planning are increasing growth, gaining competitive advantage, expanding in a new market, to improve quality and to reduce operating costs. Financial planning has such objectives as help clients retire at 65 years of age, assist clients in establishing a cash reserve, establish college savings plans for clients’ children or save $5,000 per year.


Strategic planning is commonly seen as a five-step process. It involves monitoring current trends within and outside of the organization, forecasting the future of these trends, setting goals that define the desired future of the organization, taking action to accomplish the set goals, and monitoring the progress and making changes. The first step in the financial planning process is a conversation between the client and the financial adviser. The purpose of this conversation is to educate the client about the financial planning process, to gather basic personal and financial information from her and to determine whether a financial planning relationship can be established between the adviser and the client. If the client agrees to proceed, the adviser gathers the remaining data, helps the client set financial goals, analyzes the data and encourages the client to take action to implement the goals. The last step of the financial planning process is monitoring.


Strategic planning is usually conducted by the senior management teams -- leadership determines the direction of the organization. It is then implemented by all of the units within the company according to how the specific tasks are assigned. Financial planning is conducted by the financial adviser and in some cases by teams of financial advisers and their assistants. The adviser then helps clients implement various strategies that were developed within the plan in order to accomplish their financial goals.

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