Investment Management vs. Financial Planning

And the Importance of Both

When talking about planning for the future, some people use the terms “investment management” and “financial planning” interchangeably. However, within the financial services industry, there are very important differences between these two services.

Here, we highlight those differences and the importance of incorporating both strategies as you plan for your financial future.

What’s investment management?

Investment management refers to the process of selecting, implementing and monitoring investments within a portfolio. These services are typically provided by financial professionals with experience recommending appropriate stocks, bonds, mutual funds, exchange-traded funds (ETFs) and alternative investments (such as hedge funds, private equity and venture capital, managed futures, commodities, etc.).

Investment managers make decisions about when to buy or sell assets and are focused on achieving a target rate of return within a given portfolio.

What’s financial planning?

Financial planning refers to a comprehensive approach to managing an individual’s overall financial life. While investments are an important part of the big picture, they’re viewed by financial advisors in terms of how they can help a client achieve their specific financial goals.

In addition to investments, advisors focused on comprehensive financial planning provide guidance on a wide range of financial strategies, including:

• Budgeting
• Debt management
• Insurance planning
• Tax planning and preparation
• Retirement planning
• Business planning
• College saving strategies
• Trust and estate planning

Why is it important to have both?

Your financial plan and investment strategy work hand in hand to help you achieve your long-term goals. Your financial plan helps inform your investment strategy, and your investment strategy helps you achieve the goals set forth in your financial plan. Both should be updated regularly as your life and financial situation evolve over time. Both should also take into account your current financial situation, your goals for the future and any challenges you may face.

A qualified fiduciary advisor can help ensure your investment management strategy and financial plan are working together to help achieve your version of financial success.

Could you use some help getting started? Creative Planning is here for you. Our financial advisors and investment management professionals work together to help ensure your financial plan and investments are optimized to support your goals. We’re held to a fiduciary standard, which means you can rest easy knowing your best interests are guiding every decision we make on your behalf.

If you’re ready to take the next step toward achieving your financial goals, schedule a call with a member of our team. We look forward to getting to know you.