It’s important to make sure you are comfortable that your financial planner has taken the time to understand your needs, goals and preferences before they make any recommendations. Find out more about the financial planning process and find a financial planner here.
FPA members represent the highest professional and ethical standards in financial planning. Use our Match My Planner service to find one near you. Match me now Your financial planner should explain the process they will follow, find out your needs and make sure they can meet them. You can ask them about their background, how they work and how they charge. IDENTIFYING YOUR GOALSYou work with your financial planner to identify your short and long term financial goals – this stage serves as a foundation for developing your plan. ASSESSING YOUR FINANCIAL SITUATIONYour financial planner will take a good look at your position – your assets, liabilities, insurance coverage and investment or tax strategies. PREPARING YOUR FINANCIAL PLANYour financial planner recommends suitable strategies, products and services, and answers any questions you have. IMPLEMENTING THE RECOMMENDATIONSOnce you’re ready to go ahead, your financial plan will be put into action. Where appropriate, your financial planner may work with specialist professionals, such as an accountant or solicitor. REVIEWING THE PLANYour circumstances, lifestyle and financial goals are likely to change over time, so it’s important that your financial plan is regularly reviewed, to make sure you keep on track. 1. Gather financial information about you, your background, investment objectives, risk tolerance and existing investments. 2. Identify your financial and lifestyle goals through a comprehensive risk profiling exercise that allows us to evaluate your tolerance towards market fluctuations. 3. Identify any financial issues. We do this before we progress to making recommendations on strategy or investments. 4. Prepare your personalised financial strategy which will outline appropriate investment solutions, identify any risk management, cashflow management and taxation planning issues. It will also identify any Centrelink issues, estate planning considerations and detail the benefits, features and fees. The result is a holistic financial solution presented in a detailed written report, called a Statement of Advice. 5. Implement the plan. Once you’re ready to go ahead, your financial plan will be put into action. Where appropriate, your financial planner may work with specialist professionals, such as an accountant or solicitor. 6. Provide an ongoing review so that the plan can be revised at regular intervals or when you experience life changes. In instances where other circumstances may affect your long-term plan such as changes to the economic environment or legislative changes, we will provide additional advice about your investment portfolio and recommend changes to your investment strategy. The review will also provide you with the opportunity to notify us of changes to your circumstances. This will ensure that your review is modified accordingly.
Deciding how best to plan your finances can be daunting. With so many options available and so many uncertainties, how do you choose what’s right for you? Our job is to eliminate as much of that uncertainly as possible and to work with you to identify the most appropriate way for you to achieve your financial goals. By working through a series of logical steps, we will help you gain a better understanding of the options available, and working together, we can devise and implement a suitable financial plan to target your goals. The personal Financial Planning process consists of the following six steps:
 If you would like to access our regular financial planning guides, please click here We can also offer you a free review of your financial planning with one of our qualified advisers, please email FS3 Disclaimers: The information given in this document is for information only and does not constitute investment, legal, accounting or tax advice, or representation that any investment or service is suitable or appropriate to your individual circumstances. You should seek professional advice before making any investment decision. The value of investments, and the income from them, can fall as well as rise. An investor may not get back the amount of money invested. Past performance is not a guide to future performance. The facts and opinions expressed are those of the author of the document as of the date of writing and are liable to change without notice. We do not make any representation as to the accuracy or completeness of the material and do not accept liability for any loss arising from the use hereof. We are under no obligation to ensure that updates to the document are brought to the attention of any recipient of this material. Oury Clark Oury Clark is authorised and regulated by the Financial Conduct Authority
Certified Financial Planners (CFPs) follow seven financial planning steps to create recommendations for their clients. These steps are considered to be the practice standards for CFPs. They should be followed to comply with the Certified Financial Planner Board of Standards' Code of Ethics and Standards of Conduct if the planner and client agree the standards are part of the scope of engagement between them. These steps could also be learned and applied by individuals for their own benefit if they wanted to act as their own nonprofessional financial planner. The seven steps of financial planning start with getting to know the client's current financial situation and goals and end with continually measuring performance toward those goals and updating them as necessary.
The CFPB defines financial planning as "a collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances." The CFP begins their financial planning process by asking their clients questions designed to help them get a clear picture of who the client is and what they want. Some of the questions are qualitative and lead to a better understanding of the client's health, family relationships, values, earnings potential, risk tolerance, goals, needs, priorities, and current financial plan. Some of the questions are quantitative and lead to a better understanding of the client's income, expenses, cash flow, savings, assets, liabilities, liquidity, taxes, employee and government benefits, insurance coverage, and estate plans. The advisor may ask open-ended questions to uncover necessary information to start the plan. This information may include a range of topics, from financial goals to feelings about market risk to dreams about retiring in the Caribbean. The advisor will also analyze the client's financial information to ensure they have a clear understanding of where their client stands.
For example, if you are working on retirement planning, some of the key information needed is your annual income, savings rate, years until proposed retirement, age when you are eligible to receive Social Security or a pension, how much you've saved to date, how much you will save in the future, and the expected rate of return on your investments. The advisor will use their financial expertise to help their client select goals. They'll ask clarifying questions to help identify those goals. For example, what is your time horizon? Do you want to accomplish this goal in five years, 10 years, 20 years, or 30 years? What is your risk tolerance? Are you willing to accept a high relative market risk to achieve your investment goals, or will a conservative portfolio be a better option for you? Together, the financial planner and client will prioritize which goals are most important. Next, the advisor will analyze the client's current course of action to see if it's moving them toward their financial goals. If it's not, the advisor will identify alternative courses of action and let the client know the advantages and disadvantages of each option. The financial planner selects one or more recommendations that they believe will help meet the client's goals. They evaluate each recommendation, considering:
In this step, the financial planner presents the recommendations and the thought process behind the recommendations. This helps the client make an informed decision about whether the recommendations are a good fit. Implementing the plan means putting the plan to work. But as simple as this sounds, many people find that implementation is the most difficult step in financial planning. Although you have the plan developed, it takes discipline and desire to put it into action. You may begin to wonder what may happen if you fail. This is where inaction can grow into procrastination. If the financial planner has implementation responsibilities, you'll also clarify what those are so you know exactly what steps your CFP is taking on your behalf.
Successful investors will tell you that just getting started is the most important aspect of success. You don't need to start at a high level of savings or an advanced level of investment strategy. You could learn how to invest with just one fund or you could start saving a few dollars per week to build up to your first investment. It's called "financial planning" for a reason: Plans evolve and change just like life. Once the plan is created, it's essentially a piece of history. This is why the plan needs to be monitored and tweaked from time to time. Think of what can change in your life, such as marriage, the birth of children, career changes, and more. These life events may require new perspectives or changes to your financial plans. Now think about events or changes beyond your control, such as tax laws, interest rates, inflation, stock market fluctuations, and economic recessions. Your CFP will work with you to ensure your plan is meeting your goals, and if it's not, they'll recommend changes. Now that you know the seven steps of financial planning, you can apply them to any area of personal finance, including insurance planning, tax planning, cash flow (budgeting), estate planning, investing, and retirement. While you can do it yourself, professionals can provide invaluable advice and a neutral perspective on your finances. Whether you do it yourself or hire an advisor, remember to keep referring back to the steps as significant life or financial changes occur. You may also want to do what professional financial planners do and sit down and reevaluate your plan periodically, such as once per year.
Financial planning is taking the time to determine your short- and long-term financial goals and plan how to get there. Financial planning can be done with a professional advisor, like a CFP, but it could also be done on your own. You can use many tools to help you with goals like paying down debt, evaluating your spending, and planning for retirement. If your situation is complicated, if you have a significant amount of assets, or if you want a neutral party to evaluate your situation, seeking out a financial planner to assist you can be helpful.
Financial advisors use different fee structures. Some charge a flat fee for planning and advice. Others charge a percentage of the assets they're managing on behalf of a client. Some advisors might use a combination of the two methods, where they charge a flat fee for the plan and an ongoing fee for managing funds. |
What is the next step of the financial planning process after reviewing and revising your financial plan?
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