6 Steps Of Financial Planning

6 Steps Of Financial Planning


Did you know that there are six steps in the financial planning process that are recognised internationally?

1. Establish and define a professional relationship

The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities.

The planner should explain fully how he/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 information, including your goals

Here the planner asks 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 financial planner should gather all the necessary documents before giving you the advice you need.

3. Analyse and evaluate your financial status

The planner should analyse 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 analysing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4. Develop and present financial planning recommendations and/or alternatives

The 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 recommendations

You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your “coach,” co-ordinating the whole process with you and other professionals such as attorneys or stockbrokers.

6. Monitor the progress

You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he/she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

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Paul Leonard
Paul Leonard CFP® is an executive director of Consolidated Financial Planning. He runs the Eastern Cape region and is intimately involved in the Corporate Solutions division of the company. He has become well known throughout the Eastern Cape for his daily personal finance insert called MONEY TALK on Algoa FM, and was the national runner up of the Financial Planner of the Year awards in 2006. Visit www.consolidated.co.za for more information.