To download a PDF version of this document, click here
Date of publication: September 2012
When reviewing your financial position and planning for the future, the steps you should take will broadly follow those detailed below. This guide makes reference to planning with a professional adviser, but it could equally apply to a review you may wish to conduct on your own.
The personal Financial Planning process consists of the following six steps:
- Establish and define the client-adviser relationship.
The adviser will clearly explain and document the services that he or she will provide to the client and define both his/her and the client’s responsibilities during the personal Financial Planning engagement. The adviser should explain fully how he or she will be paid and by whom. Client and adviser should agree on how long the professional relationship should last and on how decisions will be made.
- Gather client data, including goals.
The adviser will gather information about the client’s financial situation. The client and planner will mutually define the client’s personal and financial goals, understand the time frame for results and discuss how the client feels about risk. The adviser will gather all the necessary documents before giving
advice as needed.
- Analyse and evaluate financial status.
The adviser will analyse the client information to assess their current situation and determine what they must do to meet their goals. Depending on what services the client has asked for, this could include analysing assets, liabilities and cash flow, current insurance coverage, retirement planning, investments or tax strategies.
- Develop and present financial planning recommendations and/or alternatives.
The adviser will then offer recommendations that address their clients goals, based on the information provided. The adviser will discuss the recommendations with their client to help them understand so that they can make informed decisions. The adviser will listen to client concerns and revise the recommendations as appropriate.
- Implement the financial planning recommendations.
The client and the adviser will agree on how the recommendations will be carried out. The adviser is likely to carry out the recommendations and administer any contracts to be implemented. The client will be kept updated as to the progress of the implementation stage.
- Monitor the financial planning recommendations.
The client and adviser will agree on who will monitor progress towards the client’s goals. If the adviser is in charge of the process, he or she should report to the client periodically to review their situation and adjust the recommendations, if needed, as circumstances change.