6 Steps Financial Planning Process

Main Steps  Involved in Financial Planning Process

The financial planning process simply involves the use of effective a nd sound strategies and advices in meeting the goals of every individual. The six steps of financial planning process are explained below:

  1. One of the first financial planning process steps include establishing and defining the professional relationship between the financial planner and the client. Both parties should have a clear sense of the client’s financial objectives. This will of course need to include relevant documents and aspects about finances.
  2. Financial planning process stages also require data gathering. This means the client should discuss with the financial planner his or her goals. In turn, the financial planner will help the client find solutions into reducing or avoiding financial risks at the same time providing sustainable financials plans.
  3. The planning process greatly involves analysis and evaluation of the financial status of the client. Financial planners should analyze the client’s current financial situation including assets, liabilities, cash flow, insurance coverage, investments, taxes, and how these factors affect the client’s finances.
  4. The next step in financial planning is devising and presenting financial recommendations as well as alternatives to the client. These recommendations have to meet the client’s goals based on the things discussed and factors considered.
  5. Implementation of the recommendation also plays an intricate role in the process. In this stage, the client has to agree with the recommendations to be carried out. The success of the plan will depend greatly on the efficiency of the recommendations.
  6. Once the planning is enacted, the client has to monitor the flow of the financial plan. This is certainly crucial in determining its effectiveness.

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