Tuesday, December 30, 2008

Steps of Financial Planning !

1) Gathering Data, including Goals:
The first and foremost task of Financial planner is to gather information about clients financial situation. He should have all the information about the income of the clients and the expenses of the client including big ticket expenses like marriage or sending children for higher education and the time frame of each of the big events.

2) Analyzing and evaluating clients Financial Status:
Financial planner should analyze clients information to assess his current situation and determine his long term and short term goals. Determine the clients risk taking capacity as well as understand how much financial risk cover he has regarding his life, bussines, health cover and other such risk management tools.

3) Developing and presenting Financial Planning recommendations:
Financial planner should offer financial planning recommendations based on clients situation and his financial goals. FP should also explain properly each and every decision and the return and risk involved and also about the flexibility of that plan. so the client can always make informed decision

4) Implement Financial Planning recommendations:
The FP and client should agree on how the recommendations would be implemented. The client can implent on his own if he has the expertise and the FP can act as an coach. or FP can also do the implementation part as well.

5) Monitoring the financial Planning recommendations:
The plan and the financial goals should be monitored periodicaly atleast once in a quarter to maintain the status quo both the client and FP should revied and if need be change the plan depending on the clients current financial situation or as per the change in his goals.

Financial planning is not one time event. Its a continous monitoring phase.

I recommend everybody to plan and Lets plan to get Rich !

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