Financial planning is a process to help us achieve our goals with peace of mind. Take each of the seven steps. The first is to engage in the process.
Decide if you will do it yourself or engage a professional. When you select a professional, it is paramount to choose a fiduciary – legally required to place your best interest first at all times – this carries the inherent duty of loyalty. A fiduciary will expose and eliminate all conflicts of interest. Anything less should be a deal breaker. Establish a professional relationship based on trust and trustworthiness. Set expectations in advance. Following these five steps will give you a head start.
First, identify your needs. Discuss your financial satisfaction, transitions, history, principles, and objectives…
Second, define the scope of your engagement. Financial objectives and professional skill fall under seven planning topics…
Third, discuss responsibilities. Generally, your responsibilities include being open and honest about your personal finances, engaging in the process and cooperating with your advisor and other professionals. Your advisor has specific responsibilities. Other professionals have responsibilities too…
Fourth, discuss compensation arrangements. It is vital to have full and fair disclosure on how your personal financial advisor receives compensation for serving you…
Fifth, establish the term of the engagement. Your financial objectives determine the duration of commitment. Mutually establish realistic expectations…
If you take the time to gain the knowledge and skill inherent in step one of the financial planning process, then you can confidently take the next step.
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Chris Bryant is an American financial advisor.