Regardless of whether our clients request a comprehensive financial plan or are looking for investment management services, our process follows the same general outline. It begins with getting to know you, our client.
Financial planning is commonly defined as “the process of determining whether and how an individual can meet life goals through the proper management of financial resources”.
There are six steps to the financial planning process:
Establishing and defining the client-advisor relationship.
This is where we establish as clearly as possible what you expect from us and what we expect from you in return, in order to meet your expectations. For example, this is where we would determine initially whether you are seeking financial planning and investment management, investment management only, or financial planning only, or something else. Based on the level of services you request, we will make clear to you in advance the cost of those services.
Our services are fee-based rather than commission-based. This means that you compensate us for our services based on an agreed-upon fee. For investment management, this is a % of the assets we manage, and for financial planning only, it is based on an hourly rate. This is defined in greater detail in our Investment Advisory Agreement.
Gathering client data including goals.
Through the use of questionnaire forms and discussion, we gather pertinent information about your current financial situation, your concerns and your goals for the short term and the long term. The amount of data we gather is determined by the level of services that you have asked us to provide.
Analyzing and evaluating the client’s financial status.
In order to develop a plan for reaching future goals, it is imperative to know our starting point. We use the information we have gathered to determine as clearly as possible what your financial situation is at the present. For example, your net worth (assets – debts), the amount of your discretionary income (income – expenses), your current savings rate, how your investments are currently allocated, your “risk-tolerance”, what actions you have been taking for specific goals, etc...
Developing and presenting recommendations and/or alternatives.
Once we have a clear picture of your current financial situation and the resources you have available, we can develop options to achieve your stated financial goals. Based on our analysis we then develop specific recommendations. At this point, we would then review our findings with you. This first involves confirming that the information we have gathered is correct and accurately reflects your current situation and future goals. We then present our recommendations and the reasoning for each.
Implementing the recommendations.
After agreeing upon a course of action, we determine who will be responsible for each action to be implemented. Although we oversee the entire Plan, there will be some recommendations that require your action and others that we implement.
Monitoring the recommendations.
Circumstances change and planning must adapt to those changes. It is imperative to review the Plan on a regular basis to ensure that the Plan is still appropriate. This includes a review of the effect of the actions taken (did they achieve the desired outcome), an update of the new current financial situation, and a review and update of the goals.