|
| |
  Financial Planning Process
(please wait for file to load)
The Financial Planning Process
(in detail)...
Financial planning consists of the following six
distinct steps. When it's comprehensive financial planning guidance you want,
these are the steps that should guide your planner. Be familiar with them.
They'll help you get the most out of the process. And remember, it's this
big-picture approach that sets financial planners apart from all other financial
advisors who may have been trained to focus only on one aspect of your finances.
1. Establish the client—planner engagement
Your planner should:
- Explain issues and concepts
related to the overall financial planning process that are appropriate to
you.
- Explain the services he or
she will provide and the process of planning and documentation.
- Clarify your
responsibilities as a client.
- Clarify his or her
responsibilities as your planner. This should include a discussion about how
and by whom he or she will be compensated.
You and your planner should:
- Discuss the scope of the
client/planner engagement.
- Agree on how decisions will
be made.
2. Gather client data and determine your
goals and expectations
Your planner should:
- Obtain information about
your financial resources and obligations through interviews or
questionnaires.
- Gather all the necessary
documents before giving you the advice you need.
You and your planner should:
- Define your personal and
financial goals, needs and priorities.
- Investigate your values,
preferences, financial outlook and desired results as they relate to your
financial goals, needs and priorities.
3. Clarify your present financial status
and identify any problem areas and opportunities.
Your planner should:
- Analyze your information to
assess your current situation (i.e., cash flow, net worth, tax projections, etc.).
- Identify any problem areas
or opportunities with respect to your:
- Capital needs
- Risk management needs and coverage
- Investments
- Taxation
- Retirement planning
- Employee benefits
- Estate planning
- Special needs (i.e., adult dependant
needs, education needs, etc.)
4. Develop and present the financial plan
Your planner should:
- Develop and prepare a
financial plan tailored to meet your goals and objectives, values,
temperament and risk tolerance, while providing projections and
recommendations.
- Present the plan to you and
establish an appropriate review cycle.
You and your planner should:
- Work together to ensure
that the plan meets your goals and objectives.
5. Implement your financial plan
Your planner should:
- Assist you in implementing
the agreed upon recommendations. This may involve coordinating
contacts with other professionals such as investment funds sales
representatives, accountants, insurance agents and lawyers.
6. Monitor the financial plan
You and your planner should:
- Agree on who will monitor
and evaluate whether your plan is helping you progess toward your goals.
If your planner is in charge of the
process, your planner should:
- Contact you to review the
progress of the plan periodically and make adjustments to the
recommendations required to help you achieve your goals.
This review should include:
- A discussion about changes
in your personal circumstances and how they might affect your goals.
- A review and evaluation of
the impact of changing tax laws and economic circumstances.
- A review of your life
circumstances and an adjustment of the recommendations if needed as those
circumstances change through life events such as birth, illness, marriage,
retirement, etc.
|
![[Company Logo Image]](_borders/Lighthouse%20rectangular%20-%20faded.jpg)