THE PROCESS OF WORKING WITH A CFP® PROFESSIONAL
The first step in a financial planning engagement is to do a thorough review to assess where you stand and then work with you to develop your personal financial goals. From there, together we make a plan designed to reach your financial goals, guide you through it and then review your progress over time. Not every relationship is the same, and your plan may evolve as your life changes. As with anything you plan for or goals you set for yourself, it’s imperative to monitor your progress and adjust along the way if/when necessary.
YOUR FIRST MEETING
At your first meeting, we’ll discuss the financial planning process, what you would like to accomplish and how I can help you. We will discuss the services that I provide, give you information on my background, detail how you will pay for services (and products if applicable), detail how I will be compensated, and disclose any conflicts of interest.
FINANCIAL PLANNING BEGINS: Data Gathering
Once you agree to the scope of the financial planning engagement, we begin the process. The first step is to gather information about your current finances (e.g. budget, assets, debts, etc.) and overall personal circumstances. This can be a time consuming process for the client because sometimes it takes a lot of time to gather data and complete an accurate budget analysis.
After (or during) the data gathering process, we begin discussing your long-term, intermediate-term, and short-term personal financial goals. It’s imperative that we explore your goals thoroughly, as well as agree to various assumptions or estimates on specific data points (e.g. growth rates, inflation rates, mortality rates, expected retirement age, etc.). Each of these can have profound impact on the success (or failure) of your financial plan.
ANALYZING YOUR FINANCIAL STRENGTHS & VULNERABILITIES
After all of your data has been collected and input, I analyze the strengths and vulnerabilities of your current financial situation. I explore your potential courses of action and potential alternative courses of action. Depending upon your personal circumstances, this includes your cash flow, asset protection, retirement planning, emergency fund and other financial data. We discover the probability of success of your current financial situation, and explore if you need to make adjustments.
The next step, I develop recommendations to help you meet your goals. I consider the available options to determine what is right for you and the recommendations are specific to you and your personal financial situation. This usually involves financial modeling with reasonable assumptions for life expectancy, tax rates and investment returns. My responsibility is to develop recommendations that are designed to maximize the potential for you to reach your personal financial goals with the highest probability of success. This isn’t just finances: it’s your life, your health, and even planning for future generations.
CFP® PRESENTS RECOMMENDATIONS
When I present the financial planning recommendations to you, you will have the opportunity to provide feedback, ask questions and discuss adjustments to the plan. We work together to finalize the steps you will take toward reaching your goals. It’s important for you to know the reasons for the recommendations, the assumptions and estimates that I have made, and when you will need to take action to implement your plan.
PUTTING YOUR FINANCIAL PLAN INTO ACTION
Now it is time to put the plan into action. During the implementation process there will be tasks that will fall upon you, and depending upon our engagement there will be tasks for me to do. For the areas that I am handling, I will identify potential actions, products and services, and then make recommendations. You’ll have the opportunity to talk with me about all of the recommendations before you make your selections.
MONITOR PERFORMANCE: A COLLABORATIVE PARTNERSHIP
Financial planning is a collaborative process. If your planning agreement includes monitoring, then we will review the performance and progress of the plan through time. It’s your job to let me know about changes in your personal circumstances that may call for adjustments to your plan. My job is to keep track of the progress you are making to achieve your goals and determine whether any changes or updates are needed. Throughout the process, I am will be providing ongoing support, guidance and education.