Financial Planning Competency Handbook, 2nd Edition

CHAPTER 74 Developing Financial Planning Recommendations

John E. Grable, PhD, CFP^®

University of Georgia

Lance Palmer, PhD, CPA, CFP^®

University of Georgia

DEFINING A RECOMMENDATION

What does it mean to make a recommendation? The answer to this question is both deceptively simple and conceptually complex. On one level, a recommendation is akin to giving advice, offering a suggestion, proposing a solution, advocating a new perspective, prescribing a specific product or remedy, exhorting a client to adopt new behaviors, or enjoining a course of action.¹ On a deeper conceptual level, the act of making a recommendation is much more complicated. Within the context of financial planning, it is generally assumed that financial planners should strive to match technical, product, and procedural recommendations with a client’s core financial goal(s). That is, recommendations for current and/or future actions should align in such a way that a client’s financial objectives and life goals are optimally achieved, given resource constraints.

PURPOSE OF A RECOMMENDATION

Recommendations have one objective: namely, to facilitate decision making on the part of an individual or group.² Within the domain of financial planning, this means helping clients take appropriate action. Recommendations are never universal. Rather, recommendations should always be based on individual case facts and assumptions and client-specific situations. Analysis of case data and situational factors requires financial ...