The Financial Planning Process

Many people want to develop a relationship with a financial planner but don’t really know what that relationship entails. It will likely vary a bit from advisor to advisor but here is a general idea of how it works. I learned this process in the first module of the Certified Financial Planner program several years back and, for the most part, I’m still using it. The only differences would include that the process has become more electronic and also a bit more ‘holistic’ in the past few years, something I’ve written about on this blog.

 The steps are as follows:

1. Establishing and Defining the Client-Planner Relationship
So during a first meeting, the client and advisor will probably want to talk generally about what they hope to achieve from the relationship. The client will talk about areas of concern and focus and the advisor might talk about how he/she gets paid.

2. Gathering Client Data Including Goals
Sometimes advisors try to knock this step out in advance by sending information gathering documents to the potential client before the first meeting. That can work well where the potential client is a referral and there is little doubt that the relationship will progress past a first meeting. However, I usually will start gathering data during the first or perhaps second meeting. I like the first step to be discussing goals – starting with the smallest and progressing to the largest. The further one breaks down a goal into the smaller steps required to achieve it, the more likely it is to be achieved. After that the advisor will usually fill out a financial profile which covers everything from income and savings to tax and estate issues, insurance, etc. The more information the advisor has, the better, since most aspects of the financial planning process tie together at some level.

3. Analyzing and Evaluating the Client’s Financial Status
In cases where the advisor is doing comprehensive financial planning, this would be the point after the client leaves and the advisor has time to crunch through all of the documentation. The advisor will look at all of this information in the context of achieving the stated goals. After identifying products, strategies, etc, which may help the client, the advisor moves on to the new step:

4. Developing and Presenting Financial Planning Recommendations
This is the point where experience and intelligence can help. Different advisors will often come up with different solutions to help the client. In my office, we enter data into financial planning software which helps to organize data and create recommendations. We do that in conjunction with our own review and analysis to come up with the best possible strategies to assist the client. Clients will usually prefer this information laid out for them in a simple, easy-to-read way.

5. Implementing the Financial Planning Recommendation
This should be self explanatory. If you are developing an investment plan for your client, this would be the point when you implement that program. If you are buying insurance, this would be the point where you start the paperwork on that. An important part of the financial planning process is being timely and executing your strategies and ideas.

6. Monitoring the Financial Planning Recommendations
Surprisingly, a lot of advisors work hard to win business and do have good ideas, but then they forget that the world changes, tax codes change, people’s financial situations get better and worse, etc. All of these things create a need for the advisor to update the financial plan. This is why we monitor and continue to meet up with clients one to four times per year to make sure both sides of this relationship are keeping the other informed.

A person who follows this process should feel comfortable that they are taking the steps necessary to make good financial decisions. I’m happy to dive further into any of the above steps with any readers of course.

As always, feel free to reach me with any questions.

Russell Bailyn

Wealth Manager
Premier Wealth Advisors, LLC
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673

Securities offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Financial Planning offered through First Allied Advisory Services & Premier Wealth Advisors, Inc. Premier Wealth Advisors, Inc is a Registered Investment Advisor. First Allied Securities & Premier Wealth Advisors, Inc. are not affiliated entities.

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