Financial Planning
is the process of taking an individual's, family's, or business' goals
and developing a realistic plan to achieve these goals. By following
the six steps below, a plan can be created, implemented, and adjusted
periodically to meet the specific needs of each client.
- Interviewing the client.
The representative should clearly explain or document the services to
be provided to you and define both his and your responsibilities.
It is imperative that both you and your representative feel that a strong
long-term relationship can exist. Through the interview the planner
is able to identify issues and problems that the financial plan
may deal with and start gathering data to be included in the final
financial plan.
- Gathering Client Data
The financial planner should ask you for information about your
financial situation. You and your representative 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.
- Financial Analysis
The financial representative 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.
- Plan Formulation and 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. In some circumstances, the use of alternate scenarios
may be appropriate in order to provide you with choices on how
to achieve your goals.
- Plan Implementation
You and the planner should agree on the strategies which will
help you to reach your goals. The planner may carry out the recommendations
or serve as your "coach," coordinating the whole process
with you and other professionals such as attorneys, stockbrokers,
and accounting (tax) specialists.
- Monitoring and Review
You and the planner should agree on who will monitor your progress
towards your goals. By periodic review of your goals and current
financial and personal situation, you can increase the likelihood
of reaching your goals successfully.
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