The Holistic Financial Planning Process Step-by-Step

The financial planning governing body, the CFP® Board, sets a planning process standard to ensure that planners provide optimal value for our clients. 

Here is their outlined process:
  1. Understand client situation
    1. Qualitative factors e.g. client health, life expectancy, family circumstances, values, attitudes, expectations, earning potential, risk tolerance, goals, needs, priorities, and current course of action and trajectory.
    2. Quantitative factors e.g. client age, dependents, other professional advisors, income, expenses, cash flow, savings, assets, liabilities, available resources, liquidity, taxes, employee benefits, government benefits, insurance coverage, estate plans, education and retirement accounts and benefits, and risk capacity.
  2. Identify and select goals
    1. Short-term goals
    2. Long-term goals
    3. Objectives and priorities along the way
    4. Extenuating circumstances impacting goal planning, e.g. divorce, caring for family members, experiencing hardship, death in the family, etc.
  3. Analyze current actions and potential alternative course of action
  4. Determine financial planning recommendations
  5. Present the financial planning recommendation
    1. Client and CFP® practitioner meet to discuss, ensure understanding, and plan next steps
  6. Implement the financial planning recommendations
    1. Who is responsible for implementing what? 
      1. Client vs CFP® practitioner vs outside advisor/resource (CPA, attorney, etc.)
  7. Monitor progress and update
    1. Ongoing review meetings are typically recommended to be held at least annually, more frequently (such as quarterly or semi-annually) when implementing the initial plan and/or when implementing behavior change.

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