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Step 2 in the Financial Planning Process: Gathering Data #FinancialPlanning

By July 18, 2012October 4th, 2016No Comments

The second step in the financial planning process is gathering data, including your risk tolerance and goals. Identifying your risk tolerance and clarifying your goals are areas in which talking to a planner can really help you. This is the part that does not always include math or finance.

Your planner should ask for detailed information about your financial situation. She should ask for copies of your bank, brokerage, retirement account, and other financial statements; your tax returns; your insurance policies; your wills, trusts, and other estate planning documents; and any other pertinent documents. Your personal circumstances may require other documents, and your interview with your planner should uncover these. You will need to be forthcoming.

The information you must show your planner is confidential and often somewhat sensitive. Your planner is not prying by asking to see these documents; rather, she is trying to gather as much information as possible to better analyze your situation. Consequently, she will be better able to serve your financial planning needs. To work with a planner, you will really need to trust her.

A few times I have had new clients give me partial information, only to provide more details at some later date after I have gained their trust. The problem is that my recommendations were based on the initial information and may not be appropriate in light of their real circumstances.

If you cannot or will not trust someone to know detailed specifics about your financial life, you will not be able to effectively use a planner and must make do on your own. I am not saying that your planner needs to know your deepest, darkest secrets, but what you don’t tell her may affect the advice she gives you, and you and your plan may suffer.

Michael Garry Yardley Wealth Management

Author Michael Garry Yardley Wealth Management

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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