Q(1) What is a Financial Planning ?

Financial Planning is the process of meeting your life goals through the proper management of your finances. These goals can include buying a home, saving for your child’s education, starting a business or planning for retirement.

Q(2) What is a Financial Planner ?

A financial planner is someone who uses the financial planning process to help you work out a plan to meet your life goals. The planner takes a “big picture” view of your financial situation and make financial planning recommendations that are right for you. He takes into consideration all of your needs - budgeting, saving, taxes, investments, insurance, retirement planning and estate planning. He can also work with you on a single financial issue but within the context of your overall financial situation. This approach makes the financial planner different from other financial advisors who may be trained only on specific areas of your financial life.

Q(3) What is the Financial Planning Process ?

This Process consists of six steps :

i. Establishing and defining the client-planner relationship.

The financial planner should explain clearly or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.

ii. Gathering client data, including goals.

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.

iii. Analysing and evaluating your financial status.

The financial planner should analyse your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analysing your assets, liabilities, cash flow, current insurance coverage, investments and tax strategies.

iv. Developing and presenting financial planning recommendations and/or alternatives.

The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go through the recommendations with you to help you understand them to help you make informed decisions. The planner should also listen to your concerns and revise the recommendations accordingly.

v. Implementing the financial planning recommendations.

You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your “coach”, coordinating the whole process with you and your other professionals like your lawyers or stockbrokers.

vi. Monitoring the financial planning recommendations.
 
You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he should report to you on a time basis mutually agreed upon to review your situation and adjust the recommendations, if needed, to complement the changes in your life.

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