What is Comprehensive Financial Planning?

Comprehensive Planning and the “Six-Step Process”

Comprehensive financial planning is a process defined by the Professional Standards of Practice for R.F.P.s. This process does not necessarily require the completion of a comprehensive financial plan during each financial planning engagement.

To ensure Registered Financial Planners are always acting in the client’s best interest, each R.F.P.® must take all relevant personal and financial data, goals and concerns into consideration. An R.F.P.® may provide a modular planning service during a particular financial planning engagement, as long as the written plan is prepared within the context of comprehensive fact-finding. In other words, a written plan which does not contain all subject areas of a comprehensive financial plan report must still identify and inform the client of any other issue of concern that should be dealt with by the client which has come to the attention of the R.F.P.® while reviewing the facts of the case.

At the core of comprehensive financial planning, is the “Six-Step Process”:

1. Clarifying your present situation

The professional financial planner will gather all relevant financial information from you, such as details of assets and liabilities, income and expenses, tax returns, insurance policies, employment benefit and pension details and estate planning documents.

2. Identifying personal and financial goals and objectives

In order to provide appropriate recommendations to you, the planner must help you clarify your specific goals and objectives. Such goals may include retiring at age 55, buying a house, ensuring that your children’s education funding needs are met, or even taking that once in a lifetime trip.

3. Identifying financial problems and opportunities

With knowledge of both your personal goals and your current financial position, a professional financial planner can determine whether there are any impediments to reaching your goals. They will also identify opportunities that will allow you to meet your goals. For example, you may not be taking advantage of all the income tax deductions and credits available or may have too much or too little insurance.

4. Providing written recommendations and alternative solutions where appropriate

The recommendations provided will be specific to your goals and will vary with the complexity of your individual circumstances. In some cases, alternative solutions may be included. The professional financial planner will meet with you to determine which recommendations you are comfortable implementing and who will be responsible for implementation.

5. Implementation

This is a key step to ensure that you reach your goals and objectives. Your financial planner may assist you with implementation, or refer you to other appropriate professionals.

6. Periodic review

Last but not least, your financial plan needs to be reviewed and revised periodically, in order to take into account changes in your personal circumstances or the economy. For most individuals, an annual review is appropriate.

Last updated: 10 Feb 2022 3:20 PM