Plansmith Blog

After 40 years in this industry, I’ve seen the same pattern in too many boardrooms: planning treated as a static "check-the-box" exercise. In today’s volatile market, that is a liability.

Having worked with thousands of financial institutions, I’ve seen the full spectrum of planning processes. My own journey — from running our support department for years to serving as a hands-on budget and ALM model operator for our clients — has given me a front-row seat to the challenges you face. I’ve helped institutions prepare for everything from intense regulatory exams to high-stakes board presentations. Needless to say, I have seen exactly what works and what doesn't when it comes to effective planning.

If we’re being honest, the annual planning season is rarely met with a standing ovation. For many financial institution leaders, it feels like a chore – a box to check for the regulators or a heavy document destined to collect dust on a shelf.

The problem is that many management teams are still operating under the old rules of planning. These misconceptions keep brilliant leaders buried in "spreadsheet land," where they spend their time managing data instead of managing the organization.

If you want to move from a static plan to a dynamic strategy, it is time to debunk these five common myths.

I’m often asked, “What are the differences between a plan, a budget, forecasting, reforecasting, what-ifs, and stress testing?” Although some of the actions are similar and often intermingled in conversation, it’s their purpose that defines them. If you’re a client, most even involve similar keystrokes using your Plansmith software navigation; yet each plays a unique role within your organization’s total planning process. Let’s discuss.

Budget

To start, everyone’s familiar with a budget, but let’s make sure we see it for what it really is. A budget is a prediction or forecast of a financial position at a set time in the future, typically one year. A budget represents a desired financial outcome and requires consent by your board of directors. Most often a Budget is primarily thought of as cost allocations, but when combined with ideas regarding new business, you will often hear it referred to as a Plan. Once approved, the Budget Plan never changes. It is ‘set in stone’ for the duration of your selected time period.

I’m often asked, “What are the differences between a plan, a budget, forecasting, reforecasting, what-ifs, and stress testing?” Although some of the actions are similar and often intermingled in conversation, it’s their purpose that defines them. If you’re a client, most even involve similar keystrokes using your Plansmith software navigation; yet each plays a unique role within your organization’s total planning process. Let’s discuss.

Budget

To start, everyone’s familiar with a budget, but let’s make sure we see it for what it really is. A budget is a prediction or forecast of a financial position at a set time in the future, typically one year. A budget represents a desired financial outcome and requires consent by your board of directors. Most often a Budget is primarily thought of as cost allocations, but when combined with ideas regarding new business, you will often hear it referred to as a Plan. Once approved, the Budget Plan never changes. It is ‘set in stone’ for the duration of your selected time period.