The Financial Planning Process

Comprehensive financial planning consists of the following six distinct steps. The big-picture approach sets financial planners apart from all other financial "advisors" who may have only been trained to sell products.


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 current financial status and identify 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 dependent 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 progress 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.