As a Certified Financial Planner® and member of the Financial Planning Institute of Southern Africa I subscribe to the international Financial Planning Standards Board’s 6-step process to financial planning.
The steps I follow in the financial planning process are as follows:
- Establish and define the relationship with the client.
I will inform the client about the financial planning process, the services I offer, and my professional competencies and experience. The client and I will determine whether the services offered by me and my competencies meet their needs. I will determine if I have any conflicts of interest and, if so, disclose them. The client and I will agree on the services to be provided. We will agree the scope of the engagement before any financial planning is provided, including details about the responsibilities of each party (including third parties); the terms of the engagement and compensation. The scope of the engagement shall be set out in writing in a formal document signed by both parties.
- Collect the client’s information.
We shall identify the client’s personal and financial objectives, needs and priorities that are relevant to the scope of the engagement before making and/or implementing any recommendations. I shall collect sufficient quantitative and qualitative information and documents about the client relevant to the scope of the engagement before making and/or implementing any recommendations.
- Analyze and assess the client’s financial status.
I shall analyse the client’s information, subject to the scope of the engagement, to gain an understanding of the client’s financial situation. I shall assess the strengths and weaknesses of the client’s current financial situation and compare them to the client’s objectives, needs and priorities.
- Develop the financial planning recommendations and present them to the client.
I shall consider one or more strategies relevant to the client’s current situation that could reasonably meet the client’s objectives, needs and priorities and develop and present the financial planning recommendations based on the selected strategies to reasonably meet the client’s confirmed objectives, needs and priorities in a way that allows the client to make an informed decision.
- Implement the financial planning recommendations.
If accepted, the client and I will agree on implementation responsibilities that are consistent with the scope of the engagement. Based on the scope of the engagement, I will identify and present appropriate products and services that are consistent with the financial planning recommendations accepted by the client.
- Review the client’s situation.
The client and I will mutually define and agree on terms for reviewing and re-evaluating the client’s situation, including goals, risk profile, lifestyle and other relevant changes. When conducting a review, we will review the client’s situation to assess progress toward achievement of the objectives of the financial planning recommendations, determine if the recommendations are still appropriate, and confirm any revisions mutually considered necessary.