Updated on: August 3, 2023

As an advisor, you want to provide clients with transparent, holistic views into their finances. The CFP Board’s seven-step financial planning process represents a complete workflow that establishes productive, long-term relationships.

The appropriate financial planning software should be used to improve planning productivity and personalization. When executed successfully, both clients and advisors will see the benefits of developing a comprehensive and adaptable financial plan.

Step 1: Understand personal and financial circumstances

The first step in the financial planning process is to have a broad discussion about a client’s personal and financial circumstances. Taking a collaborative approach to obtain this information will build deeper client engagements.

Benefit to client: Understanding broader life circumstances can help a client identify their most important goals and create a personalized plan to get there together. With client portal technology, the client gets deeper insight into their financial situation and is empowered to share more information from the start of the relationship.

Benefit to advisor: Without knowing the full picture, you may make recommendations that negatively impact another area of your client’s financial life. You need to understand a client’s broader life circumstances to deliver truly impactful financial advice.

Step 2: Identify and select goals

Step two represents an opportunity to strengthen client relationships for more productive, long-term engagements. After understanding a client’s personal and financial circumstances, the next step is to identify potential goals with the client.

Benefit to client: Clients will examine where they want to be financially and what you can achieve together. By collaborating in this way, you’ll also begin to understand what’s most important to your client on a personal level.

Benefit to advisor: Advisors who complete this step in the process and maximize their value to the client are likely to engage their clients in more productive, long-term relationships, while their clients benefit from improved, holistic advice.

Step 3: Analyze the current course of action—and potential alternatives

Step three establishes the connection between good information and successful goal-setting, which is the heart of comprehensive financial planning. This is where you explore if and how clients should proceed to achieve their goals.

Benefit to client: Together you’ve chosen their most important goals in life. Now the client can weigh this information against their current situation and determine how progress will be measured.

Benefit to advisor: All of the information collected so far will serve as the basis of your financial plan. At this point in the relationship, you’ll be fully versed in the client’s current and potential financial outcomes, best positioning yourself as an invaluable partner.

Step 4: Develop a financial plan

You must select a recommendation that will best serve your client in achieving their most important goals. Financial planning recommendations should scale to clients’ needs and address their deepest concerns.

The most recent version of the seven-step process explicitly separates the responsibilities of developing and presenting financial plans. This underscores the importance of both in delivering impactful financial plans.

Benefit to client: Planners can offer alternative scenarios and show clients the tradeoffs and benefits of each plan.

Benefit to advisor: A balance of the real and the ideal will get more buy-in from clients. It can be empowering to make multiple recommendations, showing clients how their decisions impact their financial outcome.

Step 5: Present the financial plan

Presenting planning information in a meaningful way can help steer clients to optimal decisions. Thoughtful and understandable presentations will continue to build trust.

Benefit to client: An interactive client portal, where clients can do their own tracking and monitoring, can make this step of the process much more engaging for clients as well and deepen their commitment to the plan.

Benefit to advisor: You can further establish trust by demonstrating your transparency, especially for things like assumptions and estimates and recommendation priority.

Step 6: Implement the recommendations

Advisors need to orchestrate implementation efforts, including assigning responsibilities, analyzing actions and products, and recommending services.

Benefit to client: Clear communication and education makes the recommendations approachable and achievable.

Benefit to advisor: A concrete strategy to implement recommendations will improve the value of your advice.

Step 7: Monitor progress and update

Comprehensive financial planning is a long-term engagement. The seventh and final step of the process is monitoring and updating responsibilities, as well as monitoring client progress towards goals.

Benefit to client: With client site alerts and tracking, both parties can see goal progress, and asset allocation. These kinds of details are essential for a client to monitor success.

Benefit to advisor: Staying attuned to client’s life changes and proactively adapting financial plans helps cultivate deeper, long-term relationships.

The bottom line

Modern financial planning technology plays a major role in delivering personalized advice that drives long-term relationships between advisors and clients. This kind of technology helps comply with each step of the CFP Board’s financial planning process, in turn helping advisors best serve their clients.

Developing close relationships with clients improves their personal and financial outlook, which drives retention and growth for advisors. The seven-step financial planning process is your way to become an essential part of your clients’ financial lives.

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