7 Key Steps in the Financial Planning Process | Wealth Alliance (2024)

Determining whether to manage your finances on your own or to seek the help of a professional investment advisor is a major life choice. Obtaining the services of a skilled financial planner is unnecessary for some investors; however, many of those who would stand to gain from working with an investment advisor avoid seeking professional advice or wrongly assume that they do not need help.

Working with a reputable financial management consultant has many advantages. If you’re not employing the services of a financial advisor, do you feel that you have what it takes to make the best financial decisions for yourself and your family?

Understanding Your Individual Financial Needs

Effectively managing your investments and making the best possible choices for your situation require a great deal of time, expertise, and energy. It’s not a one-time affair, and it demands constant attention to your portfolio and to the fluctuations of the various markets and other places where you might invest your money.

Creating a clear picture of your financial situation is one of the most important moves you can make to ensure your general financial well-being and that of your family. It’s crucial to both recognize your individual requirements and to fashion a comprehensive financial plan that’s best suited to satisfy said requirements.

With little to no knowledge of what you’re looking for in terms of future financial goals and economic self-reliance, gaining financial security can be extremely challenging. It can be nearly unattainable. However, once you acquire a thorough understanding of what’s needed to achieve a robust financial life, you can come up with a set of goals to help you enhance your economic condition, thus ensuring your own security and that of your family for years to come.

Advantages of a Personal Financial Plan

There are countless advantages of the financial security that comes about immediately after generating a financial plan. From emotional- and health-related gains to social and monetary benefits, financial planning can have a positive effect on many aspects of your life.

Although numerous benefits exist, some have a greater and more long-lasting impact than others. The following are a few of the major advantages for you and your family that come from creating a well-designed personal financial plan.

• The development of an effective financial plan helps you to more easily achieve your goals and pursue your desired way of life. Studies show that individuals who have clear-cut goals toward which they’re aggressively working are about ten times more likely to attain success in life. This fact in and of itself should provide enough motivation to create a plan to manage your finances.
• The process of financial planning generates a sense of enthusiasm and responsibility that can carry over into other aspects of your life. When you have an obvious call to action and are prepared to make constructive life changes through a financial plan, ambiguity about your finances disappears.
• A well-designed financial plan serves as a clear guide for future action and decision-makingin the area of personal finances and other matters.
• Financial plans establish proper standards of performance so that no doubts about legal issues or other questions will arise.
• The process of financial planning has psychological and mental health benefits such as stress relief and the promotion of an overall sense of personal well-being.
• Financial plans have been shown to enhance long-term economic outcomes in many areas of personal finance. For example, individuals with plans are more likely to be ready for financial emergencies and to experience a comfortable, stress-free retirement.

In light of these advantages, it’s obvious that creating an effective financial plan is well worth the effort to ensure the economic and emotional health and well-being of you and your family.

Seven Steps of the Financial Planning Process

Reputable financial professionals follow a set of seven basic steps to make suggestions for their clients during the personal financial planning process. These actions are considered fundamental to effective financial planning and are carried out by all financial planners as long as both the planner and client are in agreement about the steps and accept that the actions involved are part of their relationship.

These steps may also be followed by lay persons for their own planning purposes. However, it’s ideal for the average investor to employ the services of a professional financial management advisor to avoid the hassles and stress of the do-it-yourself approach, as well as to ensure that the planning produces the best possible outcomes for him or her.

The steps in the practice of financial planning begin with learning about the client’s present finances and objectives and end with continuously evaluating accomplishments made toward achieving those objectives and revising the plan as needed.

1. Getting to know the client’s personal and financial circ*mstances. Questions in this step involve health, familydynamics, beliefs, earning potential, goals, needs, etc. Others involve income, expenses, savings, assets, liabilities, taxes, insurance, trusts, among other topics.
2. Identifying and selecting goals. Here questions are asked to help identify the client’s objectives, such as, “What is the time frame in which you want to reach these objectives?” and “What is your tolerance for losing money through an investment?”
3. Examining the current path of action to determine if it’s moving the client toward reaching his or her goals, as well as an alternate course of action.
4. Developing financial planning suggestions. In this step, one or more suggestions are chosen to potentially help reach the client’s objectives. Evaluations are performed on the assumptions made in developing the suggestions, whether the client’s goals are being met, the priority level of each suggestion, etc.
5. Presenting the suggestions and the rationale involved, thus helping the client to decide whether the proposals are a good fit with his or her goals.
6. Implementing the suggestions and putting the plan to work, which is often the most challenging step in financial planning, as it requires discipline and strong aspiration.
7. The monitoring of the plan’s progress and periodic updates are required because of changing life events such as the birth of children, which demand new perspectives or revisions of the original financial plan. Also, variables such as changes in tax laws, varying interest rates, stock market instability, and inflation need to be considered.

It should be noted that this is a general set of steps to help develop a personal financial plan, and that, as mentioned above, laypeople looking to create an effective financial plan would be wise to seek help from a knowledgeable investment management professional to ensure the most favorable outcome of their strategy.

Comprehensive Financial Management with Wealth Alliance Advisory Group

If you are interested in planning for your future and looking for help attaining financial security, you owe it to yourself to call upon the services of a financial planning company, and Wealth Alliance Advisory Group is just that. Developing a concrete and comprehensive financial plan can be a challenge, but Wealth Alliance is here to make the process as smooth as it possibly can be.