What Are the Six Steps of Financial Planning?


Quick Answer

The first three steps of financial planning are establishing a relationship between the planner and client, gathering information on the client to establish goals, and analyzing the client's financial situation, explains Investopedia. The last three steps are offering financial-planning recommendations, implementing the plan, and monitoring the client's financial progress.

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Full Answer

During the relationship-building phase, the financial planner outlines her responsibilities and those of the client, notes Investopedia. She discusses the anticipated length of the process and addresses fees. The planner then gathers information about the client's current financial status, goals and willingness to take risks. Next comes a close analysis of the client's circumstances, including factors such as cash flow, investments, tax strategies, assets and insurance. Consideration of these factors helps determine what measures the client must take.

The planner presents her recommendations and offers alternative suggestions if the client expresses concern, reports Investopedia. Once the planner and client agree on a plan, they move on to implementation, which the planner either guides or performs directly. If the client has chosen to enlist the help of additional professionals, such as stockbrokers or lawyers, the planner works alongside these individuals to ensure proper implementation of the agreed-upon steps. After implementation, the planner monitors the client's progress, suggesting adjustments in the established plan as necessary.

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