What is the Financial Planning Process?

“What is THE FINANCIAL PLANNING PROCESS?”

Creating a financial plan requires you to examine your current situation, set goals and decide how to measure your progress.  A CFP ® professional is uniquely qualified to take you through the financial planning process.

So, many of you are probably wondering, what is the Financial Planning Process.  In six steps, you and your CFP ® professional will:

1)   Agree on how you will work together. Your CFP ® professional will explain the services being provided and define each of your responsibilities.

2)   Gather information about your finances and set goals.  This is when you will discuss your current financial situation and define your personal and financial goals.

3)   Analyze and strategize. Your CFP ® professional will take all your finances into account and determine how to meet your goals. Her analysis may cover your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4)   Develop recommendations.  Next, your CFP ® professional will go over your financial recommendations.  This is when you will be able to address your questions and concerns and revise your recommendations if necessary.

5)   Put your plan into motion. You and your CFP ® professional will need to agree on how the recommendations will be implemented. Your CFP ® professional may help you with your recommendations or serve as your coach, coordinating the process with you and other professionals, like attorneys or an accountant.

6)   Monitor your progress and staying on track.  As you work towards your goals, you and your CFP ® professional will need to decide who will monitor your progress to make sure you’re staying on track. If the planner is in charge, she’ll check in from time to time, reviewing your situation and making any necessary adjustments to his recommendations.

Financial planners earn CFP ® certification by meeting education, examination, experience and ethics requirements. In addition to delivering general financial planning services, many financial planners are also registered as investment advisors or hold insurance or securities licenses that allow them to buy or sell products.

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