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In my last post I brought up the financial planning process. This is the six-step process than any good financial planner or advisor follows when working with clients. As a potential client, it’s important that you understand the basics of the process.
The six steps are:
1.
Establish and define the advisor-client relationship
2.
Determine goals and gather data
3.
Analyze and evaluate the data
4.
Develop and present a plan
5.
Implement the plan
6.
Monitor the plan
In my last post I covered the first three steps in greater detail. Now I’d like to delve into the last three steps a bit more.
The fourth step is where things all start to come together from your standpoint as the client. You should be presented with the advisor’s plan to help you achieve your financial goals. If your financial planner is a true financial planner, and not just a product specialist touting the benefits of insurance or trying to get you to buy their favorite mutual fund, they will present you with a comprehensive plan that addresses all of your financial goals and concerns. It should address the areas of:
·
Insurance planning
·
Employee benefits
·
Investments
·
Income taxes
·
Retirement (and other goal) planning
·
Estate planning
The fifth step in the plan is to actually implement the plan. This step usually involves the client evaluating the recommendations made in the plan and deciding whether they wish to implement any/all of them. Once the determination is made to move forward with the plan, it is the job of the client to provide some necessary paperwork and legwork; such as filling out new account applications, calling their Human Resources department to make changes to their 401(k) plan, applying for insurance coverage and doing the necessary health evaluations that go along with that. Financial planning is work, and some of that work falls to you, the client. This is the step in the process where things are most likely to stall. Most people think that hiring an advisor will mean they can just pay someone a fee and they’ll take care of all their financial concerns. But it doesn’t work like that. You have to do some of the work too. If you do not follow the recommendations in the plan, you’re not reaching your full financial potential. So make sure you follow up and implement the plan that your planner and her staff put together for you.
Finally, the last step involves ongoing monitoring of the plan. This could mean the planner is calling you to make sure you implemented all the recommendations, or they’re calling you back in for periodic reviews of where you stand financially. This is the second most likely step to fail. Many planners (as well as their clients) just get busy and don’t make the time to monitor the plan as they should. Your planner should be making time for periodic reviews of the plan and to check in with you to see what’s changed since your last meeting. If this isn’t offered to you, ask for it. It does little good to design a plan based on where you are at a single point in your life and never review it as things change.
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