Definition of financial planning

1. Banking. Capital budgeting and profit planning carried out by a bank's senior management committee, with the aim of managing asset growth, net income, and expenses to meet specific objectives in future time periods. Financial planning is broader in scope than Asset-Liability Management, which is largely concerned with pricing interest sensitive deposits and bank loans and managing interest rate risk and liquidity risk. In a larger sense, bank financial planning is synonymous with strategic planning and market planning, both of which are concerned with setting specific targets for deposit growth, net income, and expected payback or return from new branch offices, automated teller machines, and other facilities. Through financial planning, a bank's senior management committee formulates plans for meeting competition from other financial services companies and sets objectives for profitability, growth in market share, types of customers to be served, and so on, all of which determine the future direction of the bank.
2. Investments. Financial counseling designed to help individuals make the best use of their financial assets and achieve specific economic objectives, such as adequate funding of a child's college education expenses, or post-retirement needs. Financial planning entails writing objectives, setting up budgets, and periodically reviewing a plan. Many banks and bank trust departments offer financial planning services to help private banking or retail customers select customized financial services suiting their individual needs, charging an hourly rate or a flat fee for writing a financial plan. Professional financial planners are certified by the College for Financial Planning, Denver, Colorado.

acquisition and employment of asset in order to maximize the return on these assets through: (1) establishment of financial planning objectives; (2) development of financial plans by which these objectives are to be achieved; (3) establishment of a budget by which funds can be allocated to the purchase of the financial assets; and (4) review and, if necessary, revision of the financial plan to make sure acceptable progress is being made toward the achievement of the objectives.