Home | Finance | Investments
Financial Planning is simply a process. Generally, it comprises six-step as outlined below. 1. Establishing and defining the relationship with the client 2. Gathering client data for evaluation 3. Analyzing and evaluating the client's financial status 4. Developing and presenting financial planning recommendation 5. Executing the financial planning recommendations 6. Regular monitoring of the plan The following is a more detailed insight of what goes into each step of the financial planning process. 1. Determining and defining the mode of relationship with the customer To go through this step, the financial planner will have to define the scope of the engagement with the client. Prior to providing any financial planning service, the financial planning practitioner and the client will have to mutually define the scope of the engagement. This is really quite important. The process of mutually defining (and agreeing) the scope helps to spell out the type of activities that are necessary in order to carry on with the provision of the service. This may include but not limited to a. Identifying the services to be provided. b. Disclosing if there is any material conflict of interest from the financial planner. c. Disclosing the practitioner's form of compensation. d. Determining the client and practitioner's responsibilities. This first step is necessary to establish realistic understanding for both the client and the financial planning practitioner (or financial planner). 2. Gathering Customer Data This step is basically a process to find out more about the client and will cover the following areas: a. Determining a client's personal and financial goals and priorities. b. Obtaining quantitative information and documents from the client. 3. Analyzing and having an in-depth understanding of the client's financial status During this step, the financial planner essentially takes the client's data to thoroughly analyze them. This is to gain an understanding of the client's financial situation. Once that is established, the planner will then find out how much of the client's financial goals and priorities can be met by his resources. 4. Developing and presenting financial planning recommendations and solutions The financial planner will determine and evaluate all reasonable alternatives available for the client. He will then have to work out suitable financial planning recommendations, taking into account step (3) above. Once he has done these, he then presents it to the client. The client will then consider if the extent of the implementation of this plan. 5. Implement the financial planning recommendations During this step, the client will have agreed on the type of recommendations or solutions to be implemented. The financial planning practitioner and the client will mutually agree on the type of services (if any at all) to be provided by the planner. 6. Regular review of the plan This step involves monitoring and reviewing the recommendations and the client's progress of the financial plan. It may also involve following up and discussing with the client on the changes (if any) in view of any changes in his personal environment as well other new situations e.g. changing tax laws. Achieving financial success is really quite simple just by following this six-step process.
Article Source: http://www.worldofarticles.net
Looking out for tools and resources on financial planning? Go visit our site on simple financial planning for more information and tips. Download your free ebook whilst you are there!
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
