Financial planning can provide invaluable benefits, but the financial planning experience can vary greatly depending on the planner you work with.

The title “Financial Planner” is used loosely in the industry, making it difficult to truly find a planning professional. Choosing a Certified Financial Planner™ (CFP®) is one way to overcome this common frustration. Interviewing several CFP® advisors will increase your confidence and satisfaction.

financial planning process

With most planners, the financial planning process can be broken down into six simple steps. If you aren’t sure how this process might benefit you, it may be helpful to familiarize yourself with these steps.

Step 1: Identify Your Financial Status

When you first visit your CFP®, they will begin by getting up to speed on your status. This involves documenting your income, expenses, debts and assets.

Step 2: Identify Your Goals

Next, your CFP® will help you develop short-, medium- and long-range goals.

For example, if your family is expecting a new baby, one of your long-range goals may be saving enough money for your child to go to college when the time comes. Or you may want to start saving to buy your first home. Many people also seek financial planning to prepare for retirement.

Step 3: Identify Potential Courses of Action

During this step of the financial-planning process, you and your CFP® will evaluate all possible strategies for reaching your goal.

The specifics of this step will depend on your financial situation. However, some potential options might include making investments, setting up a trust, finding an alternative or secondary income stream, reducing expenses or depositing a certain amount of money each month into a savings account.

Step 4: Identify Alternative Courses of Action

Once you and your financial planning professional identify all your options, it’s time to select the one(s) that work best for you.

Your CFP® will talk through the pros and cons — and the potential risks and rewards — of your various options, and help you evaluate how each one will help you achieve your goals.

Step 5: Create a Formal Financial Plan

Once you choose the right path to your goals, your financial planner will formalize your plan and help you to make it a reality.

You may need to consult other professionals at this point, such as a tax or estate attorney, insurance broker, etc., depending on your action items.

Step 6: Revisit, Reevaluate and Revise Your Financial Plan

Financial planning is not a one-and-done endeavor. You must revisit it periodically to ensure you’re reaching your milestone goals. If any portions of your plan are not working, you and your planner can re-evaluate and update your plan accordingly.

As you can see, the planning process is fairly straightforward. At Divergent Wealth Advisors, our Certified Financial Planners™ understand how to help you identify and achieve your goals, now and for the future. What are you waiting for? Contact us today to schedule an appointment to get started on your financial planning.