The financial planning process

The financial planning process consists of six steps that help you take a holistic approach to assessing where you are financially. A financial planner will guide you through this process to guarantee the best possible results for your financial future. Complete our contact form and get a free financial plan.

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Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.

Step 1: Establish and define the client-planner relationship.
The financial planner should clearly explain and document the services that he or she will provide to you and define both his/her and your responsibilities during the financial planning engagement. The financial planner should explain fully how he or she will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.
Step 2: Gather client data, including goals.
The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.
Step 3: Analyze and evaluate your financial status.
The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
Step 4: Develop and present financial planning recommendations.
The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.
Step 5: Implement the financial planning recommendations.
You and the financial planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your coach, coordinating the process with you and other professionals such as attorneys, accountants or stockbrokers.
Step 6: Monitor the financial planning recommendations.
You and the financial planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he or she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.