The Process

Financial Planning is a highly personalized service. It in no way is the marketing of a “product”. Preparation and the implementation of a Financial Plan is a long term plan and not a one off exercise.

The preparation of the Financial Plan is a multi dimensional process. It requires the planner to collect as much information as possible about the current resources, assets, liabilities of the client.

One of the first steps is to

1. Establish the client –planner relationship: The role of the Financial Planner is not to suggest get rich quick schemes. Rather it is to evaluate and study the clients needs, gather and analyse data and prepare a financial plan for now and for the future. A Financial Planner preparing a plan helps in

• Organizing cash flows
• Improving cash flows
• Lower income tax – our bane
• Plan retirement
• Improve investment performance
• Lower investment risk
• Risk reduction
• Minimize estate settlement costs

The planner seeks to answer the following questions:

• What is the most immediate concern of the client?
• What is the client’s current financial situation?
• What are the client’s immediate and long term needs?
• What is the gap between the client’s needs and the current financial situation?
• What services can you apply to the clients needs?
• How would the client benefit from the service portfolio?
• What is the estimated time frame to complete the plan and accomplish goals?
• Is the role likely to be of an advisor, motivator, teacher or director?


2. Analyze and evaluate the client’s current financial status: The financial planner should analyze 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 analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

3. Develop and present financial planning recommendations and/or alternatives : The financial planner offers financial planning recommendations that address your goals, based on the information provided. The planner goes 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. The strategies are developed in the following areas:

• Cash Flow Management
• Insurance Planning
• Investment Planning
• Retirement Planning
• Income Tax Planning
• Estate Planning

Developing alternatives is crucial for making good decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:

a. Continue the same course of action.
b. Expand the current situation.
c. Change the current situation.
d. Take a new course of action.

Not all of these categories will apply to every decision situation; however, they do represent possible courses of action.

Creativity in decision making is vital to effective choices. Considering all of the possible alternatives will help you make more effective and satisfying decisions.

4. Evaluate Alternatives

a. The alternatives need to evaluated for all possible courses of action, taking into consideration your life situation, personal values, and current economic conditions.
b. Decision making will be an ongoing part of your personal and financial situation. Thus, you will need to consider the lost opportunities that will result from your decisions.

Evaluating Risk

a. Uncertainty is a part of every decision..
b. In many financial decisions, identifying and evaluating risk is difficult. The best way to consider risk is to gather information based on experience and the experiences of others and to use financial planning.

5. Implement the financial planning recommendations.
You and the financial planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your coach, coordinating the process with you and other professionals such as attorneys, accountants or stockbrokers.

6. Monitor and review the financial planning recommendations.
You and the financial planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he or she will report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. Changing personal, social, and economic factors may require more frequent assessments. When life events affect your financial needs, this financial planning process will provide a vehicle for adapting to those changes. Regularly reviewing this decision-making process will help you make priority adjustments that will bring your financial goals and activities in line with your current life situation