The Financial Planning Process


The Financial Planning Process


As a financial planner and CERTIFIED FINANCIAL PLANNER® professional, I follow the Financial Planning Standards Council (FPSC) financial planning process. FPSC says:

Financial planning is a broad, comprehensive process. It’s this big picture approach that sets qualified financial planners like CFP® professionals apart from all other financial advisors who may have been trained to focus only on one aspect of your finances.

A good financial plan takes into account all aspects of your finances, balancing what you need and want today with the personal goals you have for the future.[1]

The process has six steps:


Establishing the client/planner engagement

Here, we lay the foundation of how we work together. First we need to give an overview of the planning process. Hey, reading this article is a great start! We should also discuss the scope of our work together: what services I will provide and what documentation is involved. Some of my clients prefer to work on only one area with me, such as only reviewing their insurance coverage while leaving out their retirement planning. This is sometimes the case is someone has a strong relationship with another advisor. We'll also discuss what responsibilities you have in the process and what responsibilities I have, including how I'm compensated. Lastly, we will be clear as to how decisions are made. In my case, my recommendations are just that and the final decision is always up to you.

Determining your goals and expectations

Now we start to dig into your situation. I always like to start with a discussion about your personal and financial goals, needs, and priorities. Using questionnaires, I'll next gather some more quantitative information about your current situation and expectations for the future. I'll also want to have a look at any existing savings plans, insurance coverage, or other documentation.

Clarifying your present financial status and identifying any problem areas and opportunities

Based on the information you've provided, I'll assess your current situation. This can include your cash flow & net worth, among others. I'll identify any problem areas or opportunities we come across.

Developing and presenting the financial plan

This is one of my favourite parts. This is where I get to crunch the numbers and see how they align with your goals. I'll identify and evaluate what what strategies we could use and develop recommendations for your particular case. I'll then present my ideas to you, usually in a modular format in case there are recommendations that don't appeal to you.

Implementing the Financial Plan

Here's where things get a bit more formal. This is when we get to work implementing the plan we've created. We'll set out the process to get it done, one step at a time.

Monitoring the Financial Plan

Lastly, we're in this for the long haul, so it's not a set-it-and-forget-it kind of situation. We'll be keeping an eye on this puppy, meeting at least once a year to make sure things are still on track.


Final Thoughts

Well there you have it. That's the "exciting" process of financial planning. Okay, it might not sound too glamorous, but I love doing it and that's why you might want to leave the heavy lifting in terms of spreadsheets and time value of money calculations up to someone else! If you're already working with some sort of advisor, you might want to ask them if they follow this practice.


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