In building a financial plan, six steps outline the process taken in order to analyse your goals and situation and then to develop a plan that is right for you.

The six steps are outlined as follows:

1.  Interview the Client

This provides an opportunity for the CFP to determine what issues and problems that will need to be factored into the plan.

2.  Data Gathering

At this point the CFP can begin to gather the information required for the preparation of the financial plan.  This is normally completed through a questionnaire that will gather financial data to help establish the client's financial situation as well as information on the client's goals and objectives.

3.  Financial Analysis

The analysis of the client's financial situation allows the planner to determine the current financial status of the client.  A preliminary assessment of the client's net worth and income allows the planner to then determine whether the client's stated objectives are reasonable.

4.  Plan Formulation and Recommendations

Once the planner is comfortable with the accuracy of the information and the goal that the client has accepted, it is necessary to prepare a detailed plan.  This involves analysis of the data to determine the effect of alternative strategies to reach the client's goals.  Often this is done using software which allows for quick analysis of alternatives.

5.  Plan Implementation

At this stage, the planner will have identified the strategies which will help meet the client's goals.  These will be communicated to the client through the comprehensive plan discussed above.

6.  Monitoring and Plan Review

Financial Planning does not end with the presentation of a report.  The client's financial condition, personal situation and other factors change with time.  The plan should be reviewed periodically with perhaps an annual meeting to review factors which affect the plan.  If a major financial or personal change occurs, the plan should be reviewed at that time.

"Professional Financial Planning", Canadian Securities Institute, August 1999