As a financial advisor, the financial plan is the most important piece of your practice management. Your clients are in need of a comprehensive analysis of their financial situation that prepares them for the future. At CFS/SPF, our financial advisors use MoneyGuidePro®. MGP allows advisors to understand their clients’ current financial situation and project future success or opportunity using various algorithmic simulations.
The Financial Planning Process Has Six Basic Steps:
1. Determine financial situation:
This requires the client to disclose their full balance sheet and permits the financial advisor to have an accurate understanding of their current financial position.
2. Develop and identify financial goals and overall goals
This requires input from the client to ensure that the advisor has a clear picture of their goals in order to build this into the plan. It also helps the client get clear on what they want.
3. Develop a plan using the current data
With the data from the client’s current financial situation, goals and expectations, the financial advisor can start to build the plan. The financial advisor can determine the strengths and opportunities for growth from this data.
4. Evaluate various alternatives and understand strengths in plan and opportunities
The financial planning tool cannot do all the work on its own. The financial advisor may have to run alternative scenarios for the client to ensure that they are choosing the plan that matches their goals and risk tolerances.
5. Implement the plan with the appropriate financial solutions
The financial advisor presents the financial plan to the client, discusses financial solutions needed to achieve goals, and implements the plan with client.
6. Re-review plan when there are impactful life events
Keep in mind the plan needs periodic reviews with the client as there may be life events that change the dynamic nature of the plan.
Additional Critical Components to Review:
In addition to the six basic steps, when the financial advisor meets with the client, there are a few critical components of a financial plan they should go over.
Risk management – protecting your client, their family, their assets and business.
Risk management is a key part of the financial plan. Protecting your client, their family and assets gives them confidence in their investments. You may want to consider protecting against disability, providing solutions for long term care and advising on the options for life insurance solutions. These solutions are for a client in ages 30 to 40 year old but need to be considered for all clients.
Asset allocation – developing a personalized asset allocation for each client.
Asset allocation is where the advisor selects a variety of investment and insurance products to apportion assets in a way that is consistent with the client’s goals and current financial situation including time horizon, suitability and other various needs.
Defining Goals – understand the client’s financial priorities and develop a list of their needs, wants and wishes.
Defining goals involves a process with your clients where they identify, discover and develop short term, mid-term and long term goals. They determine their financial priorities and overall lifestyle that is important to them. This shows their needs, wants and wishes.
In conclusion, the financial planning process can be complex but by following these six basic steps and including the critical components, any advisor can master financial planning!
If you would like to learn more about financial planning and other practice management tools, reach out Jeff Ferraris at jferraris@cusonet.com or 858-530-4464.
MoneyGuidePro® is a registered trademark of PIEtech?. All images and screenshots are ©PIEtech?. Reproduced with Permission. All rights reserved.
By Jeff Ferraris
Regional Program Manager
jferraris@cusonet.com
858-530-4464
