Financial Planning

What is Financial Planning ?

Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a house, saving for your child's higher education or planning for retirement. The Financial Planning Process consists of six steps that help you take a 'big picture' look at where you are currently. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.

Financial Planning in Six Steps
Value of financial planning

Financial Planning in Six Steps

Financial Planning Process consist of six steps that financial planning professionals use to consider all aspects of a client’s financial situation when formulating financial planning strategies and making recommendations. Scroll down to learn about each step in the process.

The steps in the financial planning process are as follows :

Stablish and define the relationship with the client.
The financial planning professional informs the client about the financial planning process, the services the financial planning professional offers, and the financial planning professional’s competencies and experience. The financial planning professional and the client determine whether the services offered by the financial planning professional and his or her competencies meet the needs of the client. The financial planning professional considers his or her skills, knowledge and experience in providing the services requested or likely to be required by the client. The financial planning professional determines if he or she has, and discloses, any conflict(s) of interest. The financial planning professional and the client agree on the services to be provided. The financial planning professional describes, in writing, the scope of the engagement before any financial planning is provided, including details about: the responsibilities of each party (including third parties); the terms of the engagement; and compensation and conflict(s) of interest of the financial planning professional. The scope of the engagement is set out in writing in a formal document signed by both parties or formally accepted by the client and includes a process for terminating the engagement.
Collect the client’s information.
The financial planning professional and the client identify the client’s personal and financial objectives, needs and priorities that are relevant to the scope of the engagement before making and/or implementing any recommendations. The financial planning professional collects sufficient quantitative and qualitative information and documents about the client relevant to the scope of the engagement before making and/or implementing any recommendations.
Analyze and assess the client’s financial status.
The financial planning professional analyzes the client’s information, subject to the scope of the engagement, to gain an understanding of the client’s financial situation. The financial planning professional assesses the strengths and weaknesses of the client’s current financial situation and compares them to the client’s objectives, needs and priorities.
Develop the financial planning recommendations and present them to the client.
The financial planning professional considers one or more strategies relevant to the client’s current situation that could reasonably meet the client’s objectives, needs and priorities; develops the financial planning recommendations based on the selected strategies to reasonably meet the client’s confirmed objectives, needs and priorities; and presents the financial planning recommendations and the supporting rationale in a way that allows the client to make an informed decision.
Implement the financial planning recommendations.
The financial planning professional and the client agree on implementation responsibilities that are consistent with the scope of the engagement, the client’s acceptance of the financial planning recommendations, and the financial planning professional’s ability to implement the financial planning recommendations. Based on the scope of the engagement, the financial planning professional identifies and presents appropriate product(s) and service(s) that are consistent with the financial planning recommendations accepted by the client.
Review the client’s situation.
The financial planning professional and client mutually define and agree on terms for reviewing and reevaluating the client’s situation, including goals, risk profile, lifestyle and other relevant changes. If conducting a review, the financial planning professional and the client review the client’s situation to assess progress toward achievement of the objectives of the financial planning recommendations, determine if the recommendations are still appropriate, and confirm any revisions mutually considered necessary.

Value of financial planning

Managing finances can be stressful, even for the most savvy consumers. As more and more people become responsible for their long-term financial well-being, global research finds that most consumers feel challenged by their finances. However, consumers who work with financial professionals – particularly those who work with the CERTIFIED FINANCIAL PLANNER professionals – feel better prepared to achieve their financial goals.

A global research firm, to survey more than 19,000 people in 19 territories.

The survey found :

Just 22 percent of consumers feel strongly confident that they will achieve their financial goals, with only 17 percent believing strongly in their financial know-how, and 19 percent feeling they are successful at sticking to their financial strategies.
Knowing whom to trust is the biggest barrier to working with a financial professional. Among consumers surveyed, 68 percent rate “trustworthiness” as a very important consideration when choosing a financial professional – higher than any other consideration. But a similar percentage of consumers say they don’t know whom to trust when it comes to receiving financial advice.
Consumers with a financial plan are more confident – and those with a written, comprehensive plan are nearly three times more likely to feel strongly confident about achieving their life goals.
Financial planners with the CERTIFIED FINANCIAL PLANNER certification earn higher “excellent” ratings from consumers for important characteristics like “honesty and integrity,” “understanding needs and goals,” and “placing my interests first.”

Research on the Value of Financial Planning

Global research centered on how consumers feel about their finances, what motivates them to seek – or prevents them from seeking – the services of a financial adviser or financial planner, the areas in which people seek financial advice, and how those working with a CERTIFIED FINANCIAL PLANNER professional rate their experience. Our video explains what consumers around the world told us about the value of financial planning in their lives and how life’s better with a CERTIFIED FINANCIAL PLANNER professional :

Source By FPSB’s