How Do You Explain the Value of Financial Planning?

 

The concept of financial planning is straightforward: help people use their money to live better lives, especially once they stop working. But the practice of doing that well, and the ability to explain its value to someone who’s never experienced it, is anything but. It’s a problem I’ve wrestled with for years, so much so that I even attempted to write a PhD dissertation on the subject. 

 

One afternoon, as I was grappling with how to condense all the aspects of financial planning into an easily communicated framework, I wrote this formula in my notebook: 

 

Vfp = (Ka + O + Bm)r 

 

Of course, it’s not a formula in the true sense of the word. I can’t plug data in to get a result. What it does allow me to do is explain to someone what financial planning represents. And, since that first afternoon, I’ve tried unsuccessfully to improve upon it. 

 

Breaking it down into its component parts, here’s what it means: 

 

Vfp = (Ka + O + Bm)r 

 

Vfp = Value of financial planning 

 

Ka = Application of domain-specific Knowledge 

 

O = Organisation 

 

Bm = Behaviour management 

 

All raised to the power of r—the relationship. 

 

Let’s take those one at a time. 

 

Knowledge, Applied (Ka) 

 

Most clients are smart, and many are well educated, highly literate and/or highly numerate. They may be lawyers, accountants or experienced businesspeople. But they are not financial planners, and what they lack is the domain-specific knowledge about pensions legislation, tax wrappers, risk profiling, asset allocation, portfolio construction and estate planning that a planner has accumulated through their years of study and real-world experience. 

 

For the planner, their technical knowledge is their tool kit. But this knowledge isn’t enough on its own. The key is in its application. That means knowing how to use the right tool, at the right moment, in the right way to create the right outcome for a specific client. In other words, the application of domain-specific knowledge to a client’s unique situation—that’s where the real value is. 

 

Organisation (O) 

 

This part is often underestimated, especially by clients themselves. People don’t just need advice—they need order. Their paperwork is everywhere. Their investments are scattered. Their goals are vague. Their understanding is incomplete. They’re overwhelmed. 

 

One of the greatest gifts a planner provides is structure: sorting, simplifying, prioritising, coordinating. Helping people move from “I haven’t a clue what all this means to” to “I now understand where I’m at.” 

 

I’m sure all planners are familiar with the scenario where prospective clients come to the first meeting with carrier bags of financial paperwork—everything from pension statements to the gas bill. It happened to me all the time when I was a planner, and it never failed to surprise me just how much peace of mind you could create for a client by sorting through their paperwork, neatly filing the important stuff and discarding the rest. It taught me that providing clients with the feeling of being organised was the basis for them to give me their trust. 

 

Behaviour Management (Bm) 

 

Clients don’t always make rational decisions, especially when stressed. Markets drop, the news is screaming at them to “get out now” and the impulse to do something—anything—is strong. The planner’s job is often to help them by providing clarity, not emotion. 

 

In many cases, this is the difference between a successful plan and a derailed one. It’s not just about managing money; it’s about managing behaviour. 

 

Relationship (r) 

 

Already, our formula, Ka + O + Bm, is strong. But placing it in parentheses and raising it exponentially by the power of (r)—the relationship—is really transformative. Because you can have all the technical knowledge you’d want, provide perfect organisation and coach impeccable behaviour, but if there’s no relationship, none of it sticks. 

 

When trust is high, everything works better. Conversations go deeper. Your advice is accepted. Decisions get made, and your client relaxes. The value of everything—knowledge, organisation, behavioural coaching—is amplified. That’s why the formula ends with an exponent. 

 

Why This Formula Matters 

 

The Value of Financial Planning formula isn’t perfect. It’s not mathematically precise—you can’t plug numbers into it and get a result. But that’s not the point. It’s a tool for communicating complex concepts in a simple format. A prism for seeing your work, and its value, more clearly. 

 

Once you’ve got that clarity, it becomes easier to explain your role to clients, to colleagues, and even to yourself. Because financial planning is more than picking funds, setting budgets or completing paperwork. It’s a profession that sits at the intersection of money and meaning—where skill, structure, psychology and relationship combine to create something that genuinely improves people’s lives. 

 

And it all starts here, with one formula: 

 

Vfp = (Ka + O + Bm)r 

 

The value of planning is what you know, what you organise and how you guide behaviour—all raised to the power of trust in a relationship with someone who cares about the outcome for each and every one of their clients.