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Created: March 1, 2019
Modified: June 15, 2023

The Six Steps Of Financial Planning

What You’ll Learn:
We’re going to try to boil the process of financial planning down into six steps. It’s a daunting challenge, but it will help you better grasp the process.

[3:12] – There Are Fewer Companies To Invest In Than There Used To Be.

  • The Wall Street Journal recently published an article saying there are less companies trading on U.S. exchanges. In fact, the market is about half the size it was at its peak in the 1990s. This means certain companies have larger impacts on the market than others.

[4:52] – Why You Need To Define The Client-Planner Relationship.  

[7:13]  – Gather Client Data, And Include Goals.

  • Gathering data is the second of our six steps. This sounds intuitive, but some advisors don’t do a good job of assessing their clients’ needs and goals. Your advisor should get to know you and learn your goals, your concerns, and your background. You want to feel comfortable with your advisor.

[14:10] – Your Advisor Needs To Analyze And Evaluate Your Current Financial Situation.

  • Your advisor should help give you a current picture of your finances. They should point out what’s going well and what needs to change. You can’t begin to select investments without developing an investing strategy.

[16:22] – Most People Aren’t Where They Think They Are.

  • Many investors don’t have a clear understanding of their current financial situation. They tend to either over- or under-estimate the security of their financial situation.

[17:46] – Your Advisor Needs To Develop A Plan For You To Assess.

  • Usually, there’s time involved between steps three and four of the planning process. Your advisor needs time to develop a plan that’s custom-fit to your situation. They need to build a strategy and make investing recommendations for you to assess.

[18:50] – Is Your Advisor Helping You Implement Their Recommendations? 

  • Assuming your advisor did step four correctly, they should be willing to help you implement their recommendations. Too many advisors give you a prescription without offering to help you implement that plan.

[20:56] – Is Your Advisor Monitoring Your Plan?

  • Things change in life, and when they do, your advisor should be monitoring those changes and helping you to adjust your plan.
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