Financial Plan Development

Financial Planning Goals and Benefits

Personal financial planning is the process of formulating, implementing, and monitoring financial decisions into an integrated plan that guides an individual or a family to achieve their financial goals. CFP Board’s Code of Ethics and Standards of Conduct (Code and Standards) defines financial planning as “a collaborative process that helps maximize a Client’s potential got meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances.” The CFP Board outlines the process of financial planning in seven steps in Section C of the Standards of Conduct.

Financial Planning Tools

The financial planner uses tools such as financial statement preparation and analysis, cash flow analysis, and budgeting.

Financial Planning Process

According to the CFP Board’s Financial Planning Practice Standards, the financial planning process comprised of the following steps: (1) Understanding the client’s personal and financial circumstances, (2) Identifying and selecting goals, (3) Analyzing the client’s course of action and potential alternative courses(s) of action, (4) Developing the financial Planning Recommendation(s), (5) Presenting the Financial Planning Recommendation(s), (6) Implementing the Financial Planning Recommendation(s), (7) Monitoring and updating responsibilities.

Financial Planning Approaches

There are a wide array of possible approaches to analyzing, evaluating, and developing recommendations in the financial planning process. Each approach individually is useful and provides the planner and client with a slightly different perspective of the collected data. These approaches are, the life cycle approach, the pie chart approach, the financial statement and ratio analysis approach, the two-step/three-panel approach, the present value of goals approach, the metrics approach, the cash flow approach, and the strategic approach.

2022 CFPⓇ Board Principal Knowledge Topics and Learning Objectives

• Explain the Code of Ethics and Standards of Conduct, which are ethical and professional ideals for CFP® professionals. (A.1.b)
• Integrate the Practice Standards in developing and communicating a financial plan for a client. (A.1.e)
• Explain the disciplinary procedures employed by CFP Board. (A.2.b)
• Identify the roles and responsibilities of the securities market regulators such as FINRA, SEC and state insurance departments and distinguish between them. (A.3.a)
• Identify the regulatory authorities that impact elements of the financial planning process. (Examples include regulation of accountancy, legal practice, real estate law, insurance regulation, etc.). (A.4.a)
• Demonstrate a comprehensive understanding of investment advisor regulation and financial planning aspects of the ERISA. (A.4.c)
• Describe consumer laws that impact clients, including bankruptcy, banking, credit, privacy regulations and other relevant laws. (A.5.a)
• Discuss the fiduciary standard and its importance to the planner-client relationship. (A.6.a)

The complete CFPⓇ Certification Learning Objectives, for this and other CFPⓇ courses, may be reviewed [HERE](https://www.cfp.net/-/media/files/cfp-board/cfp-certification/2021-practice-analysis/2021-cfp-certification-learning-objectives.pdf).