Sign In

Skip Navigation LinksOneFPA > About > Press Room > Key Financial Planning Lessons Can Put the Current Market Volatility in the Right Perspective

​​​DENVER (February 9, 2018) – Over the past five days, the Dow Jones Industrial Average has seen a sharp decline of over ten-percent, which has forced many investors to make rash, emotional decisions. Rather than overreact to short-term market swings, the Financial Planning Association® (FPA®), the country's largest professional membership association for Certified Financial Planner™ (CFP®) professionals, offers some guidance to American investors that is rooted in the practice of sound financial planning.

First, it is important to understand that "financial planning" is not "investment management." Financial planning is a dynamic process where you develop a big-picture strategy for managing all of your financial resources – including investments – so you're in position to fulfill your short-term and long-term goals with the flexibility to adjust on the fly as changing circumstances dictate, which includes volatility in the markets.

"Having a financial plan helps to increase the probability of achieving your goals irrespective of what happens in the market; world events that might occur; or some of the life events that are unavoidable," says 2018 FPA President Frank Paré, CFP®.

So, what can American investors learn from the financial planning process that they can use today to keep from overreacting to the volatility? Here are some key lessons:

It's about the long-term, not the short-term: In financial planning, short-term goals are planned for accordingly, but the real focus is in putting a plan in place that helps you achieve long-term objectives. Things will come up that may take your focus off the long-term goals, but the plan keeps you moving forward no matter what is currently transpiring in the markets.

Shortsighted investment mistakes can negatively impact you in other ways: Financial planning shows you the big picture, not just a slice of it. It's about synthesizing the six core areas of your financial life (cash flow, taxes, estate planning, insurance, investments, retirement planning and, when applicable, college and special needs planning) into a coherent, orchestrated plan, so that all the disparate parts run smoothly as a whole. Making rash decisions based on short-term swings in the market can have a dire impact on other areas of your financial life.

Focus on your priorities: With goals come priorities. Some people choose to prioritize saving for retirement, others to set aside money for a long, exotic vacation. For some, paying down debt is a must; for others, saving toward a child's college education is a high priority. Financial planning allows you to set and order your priorities, then build strategies to address them.

Don't go it alone: Financial planning requires the skill, knowledge and experience of what real financial planning involves. Too often when investors make rash decisions, they are not talking with a professional first to understand the ramifications of such decisions. If you find yourself ready to overreact to the volatility, seek out the counsel of a CFP® professional first to ensure it will be the right decision.


"No one can predict where this market might end for 2018, but we at FPA know that having a financial plan and a CFP® professional to guide you during the uncertainty can significantly improve your chances of living the life you want irrespective of what happens in the markets," concluded Paré.

###

 
About the Financial Planning Association
The Financial Planning Association® (FPA®) is the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. Through a collaborative effort to provide more than 23,000 members with One ConnectionTM to tools and resources for professional development, business success, advocacy and community, FPA is the indispensable force in the advancement of today's CFP® professional. Learn more about FPA at OneFPA.org and follow on Twitter at itter.com/fpassociation.​