Financial Planning

Financial planning helps you define your goals and then work towards them, usually with assistance from a trusted advisor. Planning can be

  • situational, dealing with a specific pressing need
  • comprehensive, addressing many possible needs

An advisor who offers quick recommendations without gathering the relevant facts probably creates doubts in your mind. Each advisor has a different process. Often a letter of engagement describes the scope of the arrangement.

Here are examples of personal financial planning. (For corporations, click here.)

Planning Pyramid

A pyramid is built on a solid foundation, layer by layer.


Detailed Process

Financial Planning Process

Conventional Six-Step Process

This model is from the advisor's perspective.

  1. Establish the engagement
  2. Gather client data
  3. Analyze the client’s financial information
  4. Develop and present the Financial Plan
  5. Implement the Financial Plan
  6. Monitor the Financial Plan

Consulting Model

  1. Consultation: discuss your current situation and goals
  2. Analysis: advisor looks for solutions
  3. Proposals: you review ideas the advisor thinks will suit your situation
  4. Implementation: your advisor puts your plan in place
  5. Monitoring: advisor checks that your plan remains appropriate and gives you updates

Estate Planning

Some advisors label what they do as estate planning. This planning can be addressed when a will is prepared. Or estate planning can be the reason why a will is prepared.

There are several common goals

  • ensure that funds are available at death to
    • payoff debts
    • payoff taxes so property passes intact (eg no need to sell the family cottage)
  • other issues (eg, equitable distribution of the estate to all children)

Life insurance is often a key tool for achieving estate goals. There are interesting tactics, such using a Cascade Plan to pass funds to children or grandchildren tax-free through a contingent beneficiary designation. Don't worry if you're not an expert on beneficiary designations ;)

Sales Process


Your advisor is likely following a process with these steps

  1. Prospect
    • find a qualified prospect (has needs and ability to pay)
  2. Fact Find
  3. Analyze
    • find solutions
  4. Recommend
    • present the relevant options
  5. Close
    • help the client by implementing a solution

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