Financial Planning Process
The personal financial planning
process is generally accepted as a six-step process as follows:
Step 1: Setting goals with the client This step (that is
usually performed in conjunction with Step 2) is meant to identify
where the client wants to go in terms of his finances and life.
Step 2: Gathering relevant information on the client This
would include the qualitative and quantitative aspects of the
client's financial and relevant non-financial situation.
Step 3: Analysing the information The information gathered is
analysed so that the client's situation is properly understood. This
includes determining whether there are sufficient resources to reach
the client's goals and what those resources are.
Step 4: Constructing a financial plan Based on the
understanding of what the client wants in the future and his current
financial status, a roadmap to the client goals is drawn to
facilitate the achievements of those goals.
Step 5: Implementing the strategies in the plan Guided by the
financial plan, the strategies outlined in the plan are implemented
using the resources allocated for the purpose.
Step 6: Monitoring implementation and reviewing the plan The
implementation process is closely monitored to ensure it stays in
alignment to the client's goals. Periodic reviews are undertaken to
check for misalignment and changes in the client's situation. If
there is any deviation or significant change to the client's
situation, the strategies and goals in the financial plan are
revised accordingly.