I got to give credit where it is due. The information for this post is extracted from FPAS (Financial Planning Association of Singapore) and I do stand by it. I believe a good financial planner is also a good steward for financial affairs.
Establishing and Defining the Client-Planner Relationship
The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made. Note: Formally the planner’s name card gets presented and in some cases, a letter of engagement will provide further elaboration.
Gathering Client Data, Including Goals
The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need. Note: At the very least, the statements of net worth and cashflow ought to be prepared.
Analysing and Evaluating Your Financial Status
The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. Note: Analysing the personal financial ratios is inherent at this stage of the process.
Developing and Presenting Financial Planning Recommendations and/or Alternatives
The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate. Note: The planner should not seek to re-order your priorities for a sales target but rather, focus on your priorities.
Implement the Financial Planning Recommendations
You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your “coach,” coordinating the whole process with you and other professionals such as attorneys or stockbrokers. Note: The planner may not have the regulatory permission to carry out the necessary.
Monitor the Financial Planning Recommendations
You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.
It all appears logical and sequential at first, but as with most things that are not static, steps back and forth are inherent if not unavoidable simply because circumstances change. What is more important is that the planner is able to adapt and change with the client.