The Financial Planning Process

Investments. Insurance. Taxes. Retirement plans. Estate plans. Financial planning can encompass all of these things, but it’s much more.

Financial planning is a process that will help you reach your goals through the proper management of your finances. This process is so integral to true financial planning that I would like to take this opportunity to briefly explain what the process is – and why you should make sure that any financial planner you work with follows it.

The financial planning process consists of six steps that can help you decide where you are now, what you may want in the future and how you can reach your goals:

  1. The first step is establishing and defining the client-planner relationship. You and the planner should agree on the services to be provided, how long the relationship will continue, how decisions will be made and what responsibilities each of you has. In addition, expect the planner to explain fully how he or she will be paid and by whom.
  2. The second step involves gathering client data, including goals. You and the planner should thoroughly discuss your personal and financial goals, your timeframe for results, and, if relevant, your tolerance for investment risk. The planner also will ask you for financial information to analyze your current situation.
  3. The third step includes analyzing and evaluating your financial status. The planner should review your financial information to assess your situation before he or she begins to consider what you can do to meet your goals.
  4. The fourth step calls for developing and presenting financial planning recommendations. The recommendations should address your unique goals and priorities, based on the information you provided. Expect the planner to explain the reasons behind the recommendations, listen to any concerns you have and revise the recommendations as appropriate.
  5. The fifth step involves implementing the financial planning recommendations. You and the planner should agree on a course of action to carry out the recommendations and discuss any other professionals, such as an attorney or accountant, that may be needed.
  6. In the last step, monitoring the financial planning recommendations, you and the planner should decide who will monitor your progress toward your goals. If the planner is in charge of the process, he or she should report to you regularly and adjust the recommendations, if needed, as your life changes.

As a Certified Financial Planner™ professional, I follow this six-step financial planning process. To learn more about the standards of practice, competency and ethics by which CFP® certificants voluntarily abide, visit the Web site of Certified Financial Planner Board of Standards Inc. at www.CFP.net/learn. You can also call me at 561-961-5418 or click here. I would be pleased to answer any questions you may have about the financial planning process and how it can benefit you.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP (with flame design)® in the U.S., which it awards to individuals who successfully complete initial and ongoing certification requirements.