What is the Financial Planning Process?

Would you like to get your finances in order, but aren’t sure where to start? Do you struggle with making decisions about how best to spend and save your money so that your future needs are met?

Financial planning is the key to ending this indecision but if you haven’t sought lifestyle financial planning advice before, you may wonder exactly what’s involved.

We recently did a series of podcasts to open up the process of financial planning and what you can expect at each stage.

There are five key stages in the financial planning process.

• Stage One: The Initial Meeting

You meet with your financial planner so that he or she can get a “big picture” look at what you really want to achieve. What are your goals, values, and aspirations? Your financial planner will ask questions meant to get you to think more deeply about what you want, and really gets to know you so that he or she can best help you meet your financial goals.

The first stage is a great opportunity for thoughtful discussion, says Damien Rylett, MD of Brunel Capital Partners, giving you the chance to open up any worries you might have about running out of money in retirement or to figure out how long you have to keep working for.

• Stage Two: The Data Discovery Meeting

Your financial planner will go over your financial data with you. These are the “hard facts” and include such things as your monthly income and expenses, debts you may have, savings, existing investments, your risk profile, and so forth. This meeting helps your planner develop a realistic plan for you based upon both the hard data gathered and your previously discussed goals and objectives.

CFP Abraham Okusanya of FinalytiQ discusses in our second podcast why although this meeting isn’t as aspirational and exciting as stage one, it’s crucial for your planner to accurately gather this information.

“Garbage in – garbage out: the quality of the data we have about the client, determines what plan we can build for them.”

• Stage Three: The Plan Presentation Meeting

This meeting is interactive. You’ll brainstorm with your planner to visualise cash flow projections, which can then be adjusted during the meeting based upon a variety of parameters as presented. It’s here that you will identify goals and values that may be “hidden” – that you may not even be aware of – but are the real drivers behind what you want and need for your future.

At the end of this meeting, you will both have agreed to a plan of action, which he or she will send to you in summary form.

CFP David Crozier of Navigator FP likens this stage to the supporting third leg on a three-legged stool, together with what you want to achieve (stage one) and what you actually have, combined with your attitude to risk (stage two). Now is the time to help you understand how, and indeed if, you can reach your objectives.

• Stage Four: The Implementation Meeting

After your planner has done any revisions on the plan as necessary, the final plan is put into effect. It should be noted that your financial planner is bound by regulations as set forth by the Financial Conduct Authority, in that he or she must follow specific protocols in offering advice.

Chris Weetman of Otus Financial Planning describes this stage as ‘the definitive point of time that allows everything to be put in place – correctly.”

Stage Five: Review and Forward Planning Meeting

Finally, after the plan has been implemented, you and your financial planner will meet again – and periodically throughout the life of your plan – to review it and see what’s working, and what needs to be changed.

In addition, any change in circumstances will likely require a reworking of your financial plan so that it fits your current life and situation.

We hope this has helped you understand what you can expect from each stage of the financial planning journey, and more importantly, why each step is so important. If you’re ready to start planning for your future financial security, start with our free download.