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SIX STEPS TO EFFECTIVE FINANCIAL PLANNING

Financial planning is not just about making investments and selecting products. It is a methodological process which requires careful planning and time.

At Jordan Huebner, we have adopted a system to help our clients get the most out of financial planning.

STEP 1:

Establishing and defining the relationship between client and financial advisor

It is imperative that the relationship between client and advisor be clearly defined at the outset. The advisor should unequivocally explain the issues related to the overall financial planning process and establish the duties and responsibilities of both parties.

In particular, it is necessary to agree on the duration of the relationship and the manner in which decisions will be made. Remuneration should also be agreed upon. This could be commission-based, where the advisor earns a percentage on products sold. Or it could be fee-based, where the advisor charges an agreed fee for his consultation services. Or it could be a mixture of both.

STEP 2:

Gathering client data and setting goals

The advisor at this stage works with the client to determine the client’s personal and financial goals, needs and priorities, values and preferences plus the customer’s risk tolerance and profile. The advisor should also gather all necessary documentation at this point in time.

STEP 3:
Analysing and evaluating your financial status

After the goals have been set, the next step is to analyse the client’s current situation to determine what needs to be done to achieve them. Depending on the goals, this could involve analysing the client’s assets, liabilities and cash flow, current investments and insurance coverage, tax strategies, retirement planning and much more. Any problem areas and opportunities are to be discussed at this stage.
STEP 4:
Developing and implementing a financial plan

Now that the groundwork has been done, the advisor can now offer recommendations and provide detailed explanations for the customer to make an informed decision. The advisor can also provide projections on the returns on the investments as well as address any concerns and questions that may arise. The advisor then draws up a financial plan based on the discussions and reviews the plan with the client. Both parties then discuss the plan thoroughly and work on fine tuning it until the client is satisfied.
STEP 5:
Implementing the financial plan

The advisor and client should agree on how the financial plan is to be executed. Usually, the advisor will coordinate the entire implementation process for the customer, including working with other professionals like accountants, solicitors and stockbrokers where necessary.
STEP 6:
Monitoring the financial plan

Since financial planning is a lifelong process, it is essential for the advisor and client to regularly monitor and review the progress and goals of the financial plan. Changes in one’s personal life like births, marriage, illness and retirement can often make an impact on the customer’s goals, needs and financial situation. External factors like new tax laws and economic circumstances also play a part. It is therefore important to review the financial plan regularly and to adjust it accordingly to take into consideration the additional factors.

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What is Financial Planning ?

Six Steps to Effective Financial Planning