The Financial Plan…steps

1. Establish the Client-Planner engagement

2. Gather client data and determine your goals and expectations

3. Clarify your present financial status and identify any problem areas and opportunities

4. Develop and present the financial plan

5. Implement your financial plan

6. Monitor the financial plan

Establish the Client – Planner Engagement

The planner should:

Explain issues and concepts related to the overall financial planning process that are appropriate to the client (you).

Explains the services and the process of planning and documentation.

Clarify your responsibilities as a client

Clarify the Planners responsibilities to the client including, how they will be compensated.

1. Establish the Client – Planner Engagement

The planner and client should:

Discuss the scope of the client/planner engagement.

Agree on how decisions will be made.

2. Gather client data and determine your goals and expectations.

The planner should:

Obtain information about your financial resources and obligations through interviews or questionnaires.

Gather all the necessary documents before giving you the advice you need.

Discovery and Goal Setting

The planner and client should:

Define your personal and financial goals, needs and priorities.

Investigate the clients values, preferences. financial outlook and desired results as they relate to your financial goals, needs and priorities.

3. Clarify your present financial status and identify any problem areas and opportunities

The planner should: Analyze your information to asses your

current financial situation.

(cash flow, net worth, tax projection, tax problems, history of being audited,etc.)

Identify any problem areas or opportunities with respect to your:

capital needs risk management Investments Taxation retirement planning employee benefits estate planning and any special needs (health, education etc.)

4. Develop and Present Financial Plan

The planner should: Develop and prepare a financial plan

tailored to meet your unique values, goals, objectives, temperament and risk tolerance, while providing projections and recommendations.

Present the Plan to you and establish an appropriate review strategy / cycle / frequency.

Develop and Present Financial Plan

The planner and client should:

Work together to ensure that the plan meets your goals and objectives.

5. Implementation of your plan

The planner should: Assist you in implementing your choice of

items that were discussed. This may involve coordinating contacts with other professionals such as:

1. Accountants

2. Lawyers

3. Insurance brokers

4. Stock brokers.

6. Monitoring the Financial Plan

Together, the planner and client should: Agree on who will monitor, evaluate and

determine whether the plan is helping you progress toward your goals.

The planner should (if they are in charge of the monitoring process): Contact the client to review progress and

make adjustments to the plan as required.

Planner’s Review Process

The review should include: Discussion about any changes in your

financial goals or financial resources.

A review and evaluation of the impact of changing tax laws and economic circumstances.

A change in life circumstances (children, divorce, health, etc).

Review: Setting Goals

“Managing personal finances without a

well-defined goals is like driving a car without

knowing where you want to go “ you will never

arrive”.

Agree/Disagree?

Why?

Summary

Each of the steps in the financial planning process is critical to an effective financial plan.

Goal setting is the foundation of a relevant financial plan.

It’s critical to be able to distinguish between financial desires and financial goals.

Limited resources result in the need to work with the client to prioritize goals.

Reading Assignment

Page 129 Canadian Financial Institutions

to the end of the summary on Page 134.