What Role Does a Financial Planner Have When Creating a Financial Plan

What is the Procedure for Initiating Process of Financial Planning 

and What Role a Personal Financial Advisor Plays in Such Process

Achieving success with your financial plans can become a challenging tasks if all aspects of financial planning are not taken into consideration. A personal financial advisor can look into all the aspects of such financial planning ranging from risk management to tax planning, asset management, retirement planning, financial management and estate planning to suggest best investment strategy which will work for you. Our aim here will be to check details of financial planning process which can help you achieve your investment goals.

Steps to be Followed for Carrying Out Financial Planning

Step 1: Engagement

personal financial advisorHere your personal financial advisor will develop the scope for financial planning work that the advisor has to perform. Right at the onset an engagement letter or a letter of understanding will be created which will specify details such as:

  • Time for which you will be utilizing services of personal financial advisor.
  • Responsibilities of your financial advisor.
  • Compensation advisor will receive.
  • Procedure to be followed to resolve conflict of interest.

Step #2: Collection of Information

Information related to investment horizon, financial objectives, and other priorities will help your advisor properly understand your requirements and suggest investment options accordingly.

Step #3: Examination of Financial Details

Here your personal financial advisor will try to analyze your present financial situation as well as know more about financial goals you are trying to achieve. These details will be helpful for financial advisor in ascertaining whether it will be possible to accomplish your financial goals based upon financial situation you are in.

Step #4: Identification of Investment Strategies

In step four of the process, your personal financial advisor will try to identify strategies which will help in proper accomplishment of financial goals. These strategies will be provided to you in the form of recommendations and your financial advisor will also explain them to you so that you have a clear understanding of pros as well as cons of each of these recommendations.

Step #5: Reaching an Agreement

The next step after financial plans and objectives have been developed would consist of both you and your financial advisor reaching an agreement about implementation of those plans. In this fifth step another important task of setting up the time frame will be performed.

Step #6: Process of Review

In this last step your personal financial advisor will conduct a thorough review of all the details to make sure every task will be performed in the right manner. It will also be the time to agree about a time frame within which evaluation is to be performed to check whether everything is being done as required to accomplish your financial objectives. This type of review will help to keep everything on track as well as in implementing any changes which become necessary according to changing situations.

In Conclusion

Finally we can say that having a clearly defined process helps in streamlining all activities as well as in ensuring that all financial goals are achieved as expected within a set time frame.