Financial Planning Process Analysis

The financial planning process involves five basic steps. After the initial meeting with your financial planner, the five steps to the financial planning process include: data gathering, plan preparation, plan presentation, plan implementation, and on-going monitoring.

1. Financial Planning Process: Data gathering.

The data gathering session is one of the most important meetings you will have. This session is typical done in the home, and can takes anywhere from several hours to all day. The planner will want to inspect tax returns, bank statements, account information, retirement plans, insurance policies, trusts, wills, pensions, IRAs, investments, brokerage accounts, and other tangible bits of information.

These physical documents are

The goal of the data gather is for your planner to have a good understanding of where you are now and where you want to be in the future.

2. Financial Planning Process: Plan preparation.

Your plan will usually take three to four weeks to prepare. During this time the planner does the analysis and diagnostic work. Now that the planner knows where you are and where you want to be, he can find the most efficient path to get you there.

Your planner's recommendations may be varied and come in the form of partnerships, trusts, corporations, etc... The pros and cons of each scenario will be examined and then prepared into a written report. This report will include major strategic recommendations, as well as minor tactical suggestions. Once complete, all of the parts will fit together to create a comprehensive financial plan.

3. Financial Planning Process: Plan

At this meeting, ask your questions and make sure that the planner adequately addresses them. This meeting should be spend clarifying the details of the plan, and as each recommendation is approved, your planner will prioritize them into an "Implementation Checklist." This is simply a "To Do" list for you and your planner.

4. Financial Planning Process: Plan implementation.

The first three steps will likely be completed in about a month's time.

Step four, implementing the plan, takes a lot longer-usually about five or six months. During that time, you'll meet with your planner to go over tax planning, retirement planning, estate planning, and insurance issues. Your planner may bring in other experts -- such as attorneys to help resolve certain issues.

In the end, your plan might have as many as 25 recommendations. A few recommendations will be major, broad, strategic recommendations, each worth thousands of dollars to you. The remainder will be fine-tuning recommendations -- crossing the T's, dotting the I's, and making sure your financial affairs are really in order.

5. Financial Planning Process: On-going monitoring and