Financial Planning is process that helps the clients to plan his/her financials in a better way. Normally people do savings and investment just by advice of somebody or by push of someone and sometimes for tax purpose. But these kind of investments and saving doesn’t take him/her to his desired goal. The Financial planning here comes with the solution where the financial planner comes in contact with client and by following few steps the establishes the requirement of the client and understands his goals in life, prepares and implements the plan to make him reach his short- and long-term goals.

Following are the 6 steps of Financial planning:

  • Establishing the relationship: The Financial Planner comes in contact with his client and describe the services that he offers. Post discussion the client and financial planner reach to mutually understanding. In this meeting the client and planner decide the remuneration which will be given to planner for planning, implementing and monitoring.
  • Gathering the data and goals of the client: This is very critical part of the financial planning in the step the financial planner tries to gather maximum information of client’s financial situation, risk taking capacity, his goals and time to reach to particular goals. Post gathering all these data he prepares the report which will be further helpful in analysing and developing the plan.
  • Analysis and evaluation of client’s financial status: Post getting the information the financial planner will now evaluate the client’s financial status, assess the current situation and then reach to some decision on what needs to be done to achieve the goals withing the time frame given by the client. The Data crunching and include analysis of assets, current and expected liabilities and cash flows, insurance cover, investment or tax strategies etc. The Analysis will equip the planner in preparing a well suitable plan.
  • Developing plan and making recommendations: Now when the planner has analysed the data, he will develop the plan on the basis of cash flow, risk appetite, liabilities and current insurance cover and investment. The plan will get discussed with the client and then the financial planner will make recommendation to the client based on the goals and objectives. If there is any concern shown by the client then the financial planner will make necessary changes and make recommendation again and reach to final position of implementation.
  • Implementation: Any plan is just a plan till its implemented properly here the job of financial planners become very crucial because the plan is made for short- and long-term goals for which Equity and Debt is chosen as asset class to invest and post investment making the plan intact and implement as per goal is very important. In this process financial planner may act as a coach, co-ordinate the whole process with client and other professionals.
  • Monitoring the financial recommendations: Good plan prepared and implemented well is half job done now monitoring the plan is very -very important job. The client and planner should agree on who will actually monitor the progress that is being made towards the goal. In case the Financial planner comes with charge in his plan he/she should periodically report to the client and make recommendations.

A Study says, The client who will flow these steps with the Financial planner will surely reach to his goal on or before the time planned.