The 5 Necessary Steps of Financial Planning


Before I became a financial advisor, I was trying to understand finances. I was a client, working with an advisor who I felt did not take the time to get to know me and my situation prior to making investment recommendations. I remember thinking, “How do you know this is a good solution for me when you don’t even know anything about me?”

My gut was right. That was a salesperson rather than a trusted partner. Now that I’m in this line of work, I am an advocate for my clients, making sure they are heard and understood, and any recommendations made come during a proper financial planning process.

There are 5 steps that every good financial advisor should use. I want to walk you through these steps so you not only know what to look for but also so you can understand the why behind the what. Each of these steps are absolutely essential, and should be made in this chronological order.

  1. The first step is Discovery. This is where your advisor will be asking in-depth questions about your current situation, your risk tolerance, time horizon, and your goals. An advisor should never provide a recommendation to you without a proper discovery session.
  2. The next step is Data Gathering. This piggy backs off the discovery session by providing certain documents and statements to your advisor. This is how your advisor will examine your current situation, looking at what you have in place, including assets, liabilities, and cash flow.
  3. The third step is Analysis. Here, your advisor takes everything he or she learned in the discovery and data gathering phases and analyzes it. He or she will identify any gaps in your planning, determine if your money is working for you, and find more efficient ways to accomplish your goals.
  4. After the analysis comes the Solutions. You will get back together with your advisor to learn if you’re on track to hitting your goals and to find out what recommendations he or she has for you. You will see your financial plan, which shows you everything in one place. Any strategies given should be presented in your plan so you can see how they will improve your financial situation.
  5. And finally, I consider the 5th step an ongoing stage – a Trusted Partnership. Once you have your financial plan, it should be up to you if you want to implement any of the recommendations. You should walk away with a financial plan no matter what, and you will get to be in partnership with someone you trust. Often people wonder, “If I get a financial plan, do I have to move my money over to my advisor?” The answer is no – not if you don’t want to. If your advisor suggests moving any assets, there should be benefits that are clearly shown in your plan. Whether or not you move assets over, because you did a financial plan, that advisor should continue to be a trusted partner for you.

Those are the 5 steps that I feel every advisor should use. So when you are out looking for an advisor, ask them to describe the process they use. They may use different terms to describe these steps, but they should be fairly similar.

Whether it’s me or someone else you work with, I highly recommend working with an advisor so you can take all the guesswork out and make sure you’re on track.

Please visit my website at to learn more about how I help my clients achieve financial independence. You can also schedule an appointment with me there.

I am here for you, and would love to connect soon.

Sending my best,