Although the financial planning process has a basic structure, it must be tailored to the client’s unique interests and needs. BFP clarifies the client’s financial situation, establishes goals, gathers information, provides financial diagnostics, recommends planning options, and implements the plan. Over time, BFP monitors and adjusts the plan for any changes in the economy, market and personal situations. Specifically, we employ the following steps in the financial planning process.
Defining Goals and Assembling Financials
Identify, Articulate and Prioritize Goals – During the first meeting, BFP and the client will identify, articulate and prioritize the client’s financial goals. This initial meeting will be a free consultation. Software or card selection will be used to identify and prioritize which financial planning issues are important to the client. The planner can suggest how to facilitate goals and develop an action plan. Some clients will find that they are doing all that is necessary to accomplish their goals and only minor adjustments are necessary, while other clients will find that they need further consultation with BFP to understand their financial situation and address their financial issues. Ultimately, each client will identify personal financial planning issues.
Assemble Financial Information – During the next meeting, the planner and client will gather and assemble profile, asset, liability, income, expense, and tax information. Any information will be provided by the client or, with the client’s permission, information will be obtained from their professional advisors.
Next, the planner will assemble a net worth statement, cash flow statement, tax review and other diagnostics to address needs and goals. Other diagnostics might include investment analysis, calculations to estimate insurance needs, and commercial real estate valuation analysis. This is the foundation of the customized financial plan. Occasionally, diagnostics will reveal problems, such as a deficit in the cash flow, that must be resolved before addressing other goals. After assembling and analyzing this information, the planner and client may wish to revisit the initial financial goals to determine whether or not they are realistic.
With specific financial information now in hand, BFP and the client can review alternatives. Recommendations will be made to achieve the client’s goals based on the client’s priorities. Generally each financial situation should be addressed in order of priority. For example, a client who has lost a loved one may decide that an estate plan is a priority. Another client might be concerned about retirement; another may need to address debt. Still another client may need an asset allocation strategy for investments.
Implementation and Exectution
Next, the client must execute and implement the plan. In all situations we involve, as necessary, professionals such as tax advisors, attorneys, bank lenders, investment brokers and insurance underwriters in the planning process.
Monitoring and Adjustments
As the client and attendant professionals execute the plan, BFP monitors progress and revises the plan as circumstances change. For example, we may adjust asset allocation as the client nears retirement. In the event of a financial crisis such as the 2008 financial meltdown, BFP would review the client’s financial situation to determine if adjustments need be made to the plan.