What are the 7 steps of financial planning?

Audit your current income, savings, and your long-term savings and investment plan. If you were to ask anyone on the street what the financial planning process is, they might say, “Budgeting and saving money.” For those who want to delve into the dynamics of exactly what the CFP Board expects in terms of documentation when it comes to providing financial planning recommendations, check out their example case study here. You can also do what professional financial planners do and sit down and reevaluate your plan periodically, such as once a year. A holistic approach includes reviewing your current financial situation, your investments, and your short- and long-term financial objectives.

Develop financial planning recommendations (including not only what the Client should do, but also the timing and priority of the recommendations, and whether the recommendations are independent or should be implemented together); But as simple as it may seem, many people consider implementation to be the most difficult step in financial planning. The CFP begins its financial planning process by asking its clients questions designed to help them have a clear idea of who the customer is and what they want. Determining the right lines of action to achieve your financial goals is what it comes to when it comes to planning. I write about financial planning strategies and practice management ideas, and I have created several companies to help people implement them.

Financial planning can be done with a professional advisor, such as a CFP, but it can also be done on your own. Some of the questions are qualitative and lead to a better understanding of the client's health, family relationships, values, earning potential, risk tolerance, goals, needs, priorities, and current financial plan. In addition, offering such a plan or creating a “reasonable basis” for the Customer to believe that the service will be provided also implies an obligation to actually carry out the financial planning process and comply with standards of practice. In fact, a recent study by Kitces Research found that the average time needed to create and deliver a comprehensive financial plan was 10 hours (including the time of the advisor himself and of the administrative or professional support staff who could also participate in the process).

As part of the financial planning process, you should also assess the possible course of action and take into account your values, your current life and your economic conditions. Michael Kitces is the director of planning strategy at Buckingham Strategic Wealth, a provider of turnkey wealth management services that supports thousands of independent financial advisors. Once you have your complete financial picture, you can start setting realistic goals with your financial planner.