The Financial Planning Process consists of the following 5 steps:
The financial planner gets appropriate information about client’s financial situation e.g. income, commitments etc The client and the planner should mutually define the client’s personal and financial goals, understand the time frame for results and discuss, if relevant, how the client feels about risk. The financial planner will review all the necessary information before giving the client the advice he / she needs.
The financial planner will analyze the client information to assess his/her current situation and determine what the client must do to meet his/her goals. This will include analyzing the assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
The financial planner will offer financial planning recommendations that address the client’s goals, based on the information provided. The planner will go over the recommendations with the client to help the client understand them so that he/she can make informed decisions. The planner will take into account the client concerns and revise the recommendations as appropriate.
The client and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve the client as his/her "coach," coordinating the whole process and where appropriate include other professionals such as attorneys or stockbrokers.
The client and the planner should agree on who will monitor the progress towards achieving the client’s goals.. If the planner is in charge of the process, she or he will report to the client periodically to review the client’s situation and adjust the recommendations, if needed, as the client life changes
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