Financial Planning Process

Financial Planning Process

• Determine short-term and long-term financial goals and objectives.

• Assess current financial status.

• Evaluate goals and objectives in light of current financial status.

• Consider options going forward.

• Implement the plan.

• Review and update.

Components of Financial Planning Process

• Cash flow analysis.

• Debt reduction [if applicable]

• Risk management issues.

  • List risks, determine if risks are insurable, discuss insurance coverage options, decided if the risk to insure or self-insure.

    • [Does not include liability or property-casualty insurance risks.]

• Pre-retirement planning.

  • List expected retirement age and retirement income objective.

  • Determine expected sources of retirement income.

  • Project sources of income’s ability to maintain long-term retirement income objectives.

• Post-retirement planning.

  • Review current retirement income and expenses.

  • Project possible new expenses.

  • Evaluate the retirement income sources and their ability to maintain retirement objectives.

• Evaluate the money management strategy.

  • List money management objectives.

  • Review current asset allocation.

  • Discuss expected return and historical volatility.

  • Assess the strategy’s ability to meet objectives.

• Determine estate planning objectives.

  • Discuss appropriate estate planning documents. 

    • [Estate plan and documents should be drafted by a qualified estate planning attorney.]

  • Review of beneficiary designations in light of estate planning objectives.

• Tax Considerations

  • Discuss the impact of taxes on goals and objectives.

  • Consider various tax planning strategies. 

    • [Tax planning and preparation should be done with qualified tax planning accountant.]

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