Step 1: Identify, Establish and Prioritize Goals
Financial Planning is about achieving your hopes and dreams: a comfortable retirement, paying for your children’s education, buying a home, providing for loved ones, becoming debt free, and so on. During this step of the process we will discuss what it is you want to accomplish in life and how your finances might play a role. Because specific goals are usually tied to a certain point in the future, this step will also help establish your time horizons for achieving your goals.
Step 2: Gather Personal and Financial Data
During this step of the process we gather all of the pertinent information to assess your current situation. Your present circumstances will have a significant impact on the plan that’s best for you. Examples of information which may need to be gathered includes your bank and brokerage statements, insurance policies, estate documents, and maybe even your most recent tax returns.
Step 3: Analyze and Evaluate Financial Data
During this step of the process we analyze your information to assess your current situation and determine what options you may have and what must be done in order to meet your goals. As the picture develops, specific shortfalls or excesses will come into focus, along with areas needed to change.
Step 4: Create a Plan
During this step, a plan is developed which serves as a roadmap as to how to achieve your specific financial goals. Your plan may call for immediate changes, such as diversifying your investments, shifting your asset allocation, consolidating accounts, optimizing your insurance coverage, or drafting wills and other estate planning documents. Your plan may also call for longer-term actions such as altering your spending and saving habits over time.
Step 5: Implement the Plan
During this step, the agreed upon plan details are established and put into place. Implementing your plan may involve opening certain types of accounts or purchasing certain types of securities, policies, funds or other financial and investment-related products.
Step 6: Review and Monitor the plan
This step involves keeping an eye on your progress of achievement against the plan over time. For example, this entails monitoring and refining your plan based on the performance of your investments, periodically rebalancing your portfolio to keep your asset allocation on target, updating your insurance and your estate plan, and so on. It also includes revising your plan as necessary as your life changes (i.e. marriage, divorce, newborn, job loss, disability, etc.).
