What Are the Six Components of Financial Planning?

Financial planning is typically structured around six core components that together provide a comprehensive view of a client's financial life. The first is financial statement analysis, which involves reviewing a client's income, expenses, assets, and liabilities to establish a clear picture of their current financial position. This forms the foundation on which all other planning decisions are built. The second component is tax planning, which focuses on legally minimising a client's tax burden through the efficient use of allowances, reliefs, and structures. Good tax planning is integrated into every other area of financial planning rather than treated as a separate exercise. The third component is investment planning, which involves developing a strategy to grow and protect a client's wealth in line with their goals, time horizon, and attitude to risk. The fourth is retirement planning, which looks at how a client will accumulate sufficient assets during their working life to fund the lifestyle they want in retirement. This typically involves pension planning, cashflow modelling, and state pension assessment. The fifth component is protection planning, which identifies the financial risks a client faces from events such as death, serious illness, or loss of income, and puts appropriate insurance solutions in place to manage those risks. The sixth component is estate and legacy planning, which addresses how a client's wealth will be managed, protected, and ultimately transferred to the next generation or to chosen charities in the most tax-efficient and orderly way possible. Together, these six components ensure that all aspects of a client's financial life are considered in an integrated and cohesive way.