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The Financial Planning Process

The personal financial planning process consists of the following six steps:

  1. Establish and define the client-planner relationship.
    The personal 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 personal financial planning engagement. The personal 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.
  2. Gather client data, including goals.
    The personal 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 personal financial planner should gather all the necessary documents before giving you the advice you need.
  3. Analyze and evaluate your financial status.
    The personal 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.
  4. Develop and present financial planning recommendations and/or alternatives.
    The personal 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.
  5. Implement the financial planning recommendations.
    You and the personal 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.
  6. Monitor the financial planning recommendations.
    You and the personal 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.

© 2006, Financial Planning Standards Board Ltd. All rights reserved. Through a licensing agreement, material in this section is based wholly or in part on copyrighted materials owned by Certified Financial Planner Board of Standards Inc. See our copyright notice for more.

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or in part on copyrighted materials owned by Financial Planning Standards Board Ltd. and Certified Financial Planner Board of Standards Inc. and are used with permission.
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