There are six steps to the Certified Financial Planning™ process. First, the client and the advisor define the scope of the engagement at the beginning of process. This could be planning for retirement, college, minimizing taxes, a large purchase or vacation, and even for establishing an estate. Most often, people are concerned with determine how much needs to be set aside for retirement. The planning process helps determine what that amount will be.
The second step in the planning process is to gather all the necessary client data in order to help define the goal. This means that I will collect the client’s financial information in order to understand their needs. You’ll want to pass along paycheck information, savings and retirement account statements, as well as your insurance and legal documents. Step three is to analyze all of the information I’ve collected. After I have spent time reviewing the information presented to me by the client, I start work on developing the financial plan.
Step five is where the client and the advisor work together to implement the plan. Depending on the client’s goal, changes in savings or investment strategies will take place during this step. Once this takes place, the client has the option to continue working with the advisor or to monitor the plan on their own. Most of my clients choose ongoing services, which helps facilitate step six of the CFP® planning process.
The final step is to monitor the plan and make adjustments as necessary. Periodic rebalancing and review of your financial position help keep clients on track towards their goals. Needs may change over time. Life happens and your plan needs to adapt. The graphic below provides a good idea of how the process works. It’s not a straight line, but rather a continuous loop that builds upwards towards retirement.