THE PROCESS OF FINANCIAL PLANNING: THE ENGAGEMENT

1
THE PROCESS OF FINANCIAL PLANNING THE ENGAGEMENT
2
THE ENGAGEMENT PRELIMINARIES

• The Role(s) of the Financial Planner
• The Financial Life Cycle Model
• Forms of Structured Communication
• The Interview Process

3
THE FINANCIAL LIFE CYCLETHE TRADITIONAL MODEL
Marriage, Children
Birth
Retirement
Death
20
65
75
40
Accumulation 45 years
Preservation 25 years
Distribution 10 years
4
THE FINANCIAL LIFE CYCLETHE CURRENT MODEL
Marriage, Children
Birth
Retirement
Death
20
65
85
30
62
75
40
Accumulation 42 years
Preservation 22 years
Distribution 23 years
5
THE INTERVIEW PROCESS

• The Purposes of the Interview
• The Structure of the Interview Process
• Client Personality Types
• Plan Presentation

6
FINANCIAL GOAL-SETTING

• Financial goals should be crystallized in the
  engagement, and determine the content of the
  financial plan

7
FINANCIAL GOALS

• Rule 1 Financial goals determine the content of
  the financial plan.
• Rule 2 Goal attributes
• Rule 3 Goal types

Adapted from Wealth Management, by Harold
Evensky
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GOOD GOALS AND BAD GOALS
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GOAL-SETTING SUMMARY

• 1. Identify goals - timing, cost, priority.
• 2. Determine necessary steps -- action plan.
• 3. Implement plan
• 4. Monitor plan

10
RESPONSIBILITIES OF THE PLANNER

• The nature of the planner-client relationship
• The role of a fiduciary
• Disclosure issues compensation, risk, and
  conflicts-of-interest