I went to the web-site for CFPs and financial planning was defined as, "Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your childs education or planning for retirement." No where in this definition does it say financial planning is only for the wealthy.
Under this definition, everyone should be doing their own financial
planning or using a professional to assist them in defining
and reaching their goals.
The web-site outlines further the process which includes six steps. Should you choose to work with a professional, these are the steps you should go through.
Step 1. Establishing and defining the client-planner relationship. Key foundational points are made at this time. The planner should outline theirs as well as your responsibilities during the relationship. They should disclose how they will be paid and by whom, how long the relationship is expected to last, and how decisions will be made.
Step 2. At this point the planner should gather basic information
about you and your family. They may assist you in defining your
personal and financial goals and explain the timeframe to expect
results and to discuss risk. The planner
should also obtain all necessary documents prior to giving advice.
Step 3. During this time, the planner should analyze and evaluate your current financial status and how it relates to your goals. Depending upon the original scope of service, the planner may be looking at many aspects of your finances. This could include insurance coverage for property, life, disability, and long-term care. Your income tax returns and projected taxes could also be covered, as well as your investments and how they are currently growing and the additions you are making to them. Discussion of your will or trusts may also take place.
Step 4. The planner will prepare a presentation or outline of the recommendations they have developed. These will be based upon the information shared, so if something was left out of the conversation, then the solution presented may also have something missing. It is during this time you will have the opportunity to share additional concerns if any, as these may arise from seeing recommendations and were not originally anticipated or known. The planner may be required to modify their recommendations based upon conversations at this meeting or may be able to resolve concerns through additional explanations.
Step 5. You should now be ready to implement the recommendations. The planner may assist in prioritizing the process, if all the recommendations cannot be made at once. They may also serve as a coach, if it was agreed upon in the beginning that you would implement the solutions on your own. The planner may also coordinate required meetings with other professionals if required, such as an attorney to complete a trust document or will.
Step 6. Once the plan has been implemented, monitoring is required
to ensure the recommendations go as planned. An agreement should be in
place as to who will be monitoring the process. Most often it is the
planner, but this should be made clear in step one of this process.
Since life happens and we are rarely without some type of change in our
life, these changes should be relayed to the planner. Depending upon
the change, notification can take place at scheduled meetings
such as annual reviews. However, some may require immediate notification such as a job loss or death of an immediate
Upon review of this information, I hope you will determine financial planning is for everyone and the amount of money in your checking or investment account is not the decision point. While some financial planners like to focus on certain aspects of the process, there are many planners willing to look at the big picture and to handle as much of the process as you would have them do. If you are having difficulty in reaching your financial goals, then working with a financial planner may be the missing key to your success. Take time to interview planners in your area, determine their level of service and knowledge, and decide whether you can work with them. Good luck and good investing.
HOW TO REACH THE WRITER
Would you like a response to a financial question? Send your question to Doug Horn, 115 W. Broadway, Maryville TN 37801. Be sure to mark your envelope Money Matters.
Doug Horn, CFP, is an area financial planner with more than 21 years financial experience and founder of Quality Financial Concepts, located in downtown Maryville on Broadway.
Doug Horn, CFP, Registered Investment Advisor in Tennessee and Texas
and Registered Principal, Branch Office of and
Securities offered through CUE Financial, Member NASD, IPC.