The Financial Planning Process: Everything You Need To Know


As you go through searching and deciding upon a financial advisor, the next crucial step is understanding the financial planning process. Many people are unfamiliar with what goes into organizing your finances, setting financial goals, and setting a plan to achieve those goals. The planning process is not easy and can be overwhelming to many people, which is why a financial planner is essential to finding and building the right financial path.

Finances are stressful enough without the added complications of planning your financial future – from your current financial situation to determining a retirement plan. One of the most important things that you will have to encounter in life is the financial planning process. If you have the proper help from a good financial advisor, you can be assured that this process will be a lot easier than it is hard. Furthermore, it will be uncomplicated and not overwhelming for you, helping you achieve financial peace of mind. 

To be able to achieve your financial goals, you need to learn about setting financial objectives and determining a plan on how to reach those objectives. There’s a lot that goes into building a financial plan. However, in order to understand the steps of the financial planning process, you first need to understand to what it refers.

What Is The Financial Planning Process?

Simply put, the financial planning process pertains to the process of efficiently managing your money and achieving personal economic and financial satisfaction. This process also allows you to take control of your financial solutions. Determining the right courses of action to achieving your financial objectives is what it’s all about when it comes to the planning process.

A good financial gameplan is oftentimes a comprehensive financial plan. This means that a financial advisor looks at your current financial situation, your investments, and both your short term and long term financial goals. They will look at how you currently spend your money, help you organize your finances, and help you with an investment plan. They may even help you will an estate plan when the time comes. This is why the financial process is so cumbersome and overwhelming to many people who try to do it themselves. There’s so much involved that it’s always beneficial to get help from a certified financial planner, who can help you with the small financial decisions as well as the large ones like retirement saving and investment planning.

Financial Planning – From Start To Finish

There are many crucial steps to financial planning that need to be taken in order to successfully achieve financial goals. If any step is overlooked, it could mean postponing your dream retirement or having to rethink your entire financial future and goals. There are seven crucial steps that you and a financial advisor need to take in order to make the entire process successful. 

1. Find A Good Certified Financial Planner (CFP)

Before you even begin the financial planning process you need to find a good certified financial planner. Without a good CFP, the entire financial strategy could end in failure, costing you your wealth and your dreams. You can’t develop a good plan without a CFP, which is why this is the very first step and perhaps the most important and influential step. You should choose a CFP that is experienced and knowledgeable, as well as one that is located near you. Furthermore, you should choose a CFP with fiduciary responsibility, meaning they have the heart of a teacher and not a salesperson, looking out for your best interests.

2. Determine Your Present Financial Situation

With this step, you start getting into the actual financial planning process. Determining your present financial situation is an ideal way of laying down a foundation of financial planning activities. Gathering data, such as your financial documents regarding your savings, income, debts, and living expenses is part of this step. If you don’t know your current financial situation, it’s impossible to determine the steps you need to take to reach your goals. 

3. Develop Financial Goals

Once you’ve got your entire financial picture, you can start setting realistic goals with your financial planner. However, once you set goals, it’s important to revisit them periodically so you can view progress. Furthermore, in order to set your goals, you need to figure out how you really feel about money and the reason why you feel that way. The real purpose of this careful analysis is to differentiate your wants and needs. Your philosophy towards money will determine how realistic your goals are and what steps you need to take to get there.

4. Identify Alternative Courses of Action

Creating alternatives is vital for making sound financial decisions. Though various factors influence available alternatives, there are possible and effective courses of actions that commonly fall into the following categories:

  • Expanding current situations
  • Continuing similar course of actions
  • Changing course of actions
  • Taking new course of actions

Just like you may have backup plans when you go on a long road trip, so too should you have a backup plan for your financial future. This way any detours will not keep you from reaching your financial goals. Furthermore, you’ll be able to make informed decisions if you can see all the potential outcomes and paths.

5. Evaluate Alternatives

As part of the financial planning process, you also need to evaluate the potential course of action and take into consideration your personal values, current life, and economic conditions. Each decision closes off alternatives so proper decision making is a vital part of your financial and personal situation.

Since uncertainty is always part of each and every decision, you need to evaluate the risks. In some instances, evaluating the risks is hard. To limit risk-taking, you need to gather information based on your own experiences and experiences of other people. Also, use reliable sources with financial planning.

6. Create and Implement Financial Plans of Action

In this important step of the financial planning process, you will actually develop a plan of action for reaching your goals. This will require you to choose ways on how to achieve your financial goals. Upon achieving the short-term financial goals, your next priority will be clearer. However, at this point, you will still need your CFP’s help when implementing your financial plans of action.

7. Reevaluate (and Revise) your Plan 

The financial planning process is said to be a highly dynamic process that does not end when you take action. You will need to constantly assess your financial decisions regularly, meeting and discussing any changes or revisions with your CFP. Changing social, economic, and personal factors might require more frequent careful assessments.

In times that life events tend to affect your financial needs, a comprehensive financial plan will help you properly adapt to those changes. Regularly reviewing the process helps in making priority adjustments to your personal and financial decisions. It will bring financial activities and goals aligned with your present life situation.

If you are ready to go through the financial planning process, contact The Retirement Planning Group today. Our team of financial planners can help you with all of your financial planning needs.