Personal Financial Planning Process in Five Steps

Subject: Financial Management
Pages: 2
Words: 421
Reading time:
2 min

Data gathering

This involves collecting information on your tax returns, income statements, balance sheets, retirement plan documents, insurance policies, bank statements, trusts, wills, and investment policies. During data gathering, your planner will also want to obtain subjective information from you, such as our lifestyle goals, your desired age of retirement, and the manner in which you wish to distribute your estate. In addition, your planers will want to assess your attitude towards tax aggressiveness, risk tolerance, and simplicity as far as your financial affairs are concerned.

Plan preparation

This is the diagnostic step of the financial planning process. Already, your financial planners know you and our financial objectives. Next, he/she has discovered the most efficient way of helping you realize your financial goal(s). To do this, your financial provide you with written strategic recommendations.

Plan presentation

Once you have all the recommendations on paper, your financial planner helps you to go through them, and in the process, he/she will assist in reviewing the major areas. You now need to go over the plan and write down an emerging question. When you nest meet with your planner, he/she should attempt to answer any of your questions regarding the plan. In addition, your financial planner also needs to clarify all the details of the plan. Priority is given to those recommendation strategies that you agree with. These may then be implemented.

Plan implementation

Implanting your financial plan may take as long as six months. During this time, you will have to hold a number of meetings with your planner to go over your retirement planning, tax planning, insurance issues, and estate planning. At this stage, other experts (for example, an attorney) may also come into the picture to assist in solving some of the emerging issues. More recommendations may emerge, and you need to fine-tune some of them.

On-going monitoring and maintenance

Even after the implementation of our financial plan, it is important to retain your planner for purposes of providing ongoing advice and regular updates. Some of these include portfolio reviews, annual tax-planning sessions, and insurance updates, among others. Some of the valuable advice that you may get from your planner include whether you need to refinance your lease, mortgage, or purchase a car. It is important that your financial planner remains alert to changes that may potentially impact your plan.