The strategic planning process of investments can be seen as the development of a relationship between financial planner and client. Generally, the process can be separated into 6 steps that will be described and explained in detail later in this article. It is important to understand that the process is recognized as efficient for both the planner and the client, since it joined the natural tendencies of the natural relationship that would be formed between the two sides there was no process.
It is essential to understand that the strategic planning process has as main objective to help the client achieve its goals and increase the chance to achieve the predefined objectives. The process aims to develop a relationship that will allow the planner to understand the needs, objectives and concerns of the client.
Step 1 – The mission statement
The first step of the strategic planning process of investments and drafting a mission statement and the beginning of the relationship between client and financial planner.
This is the bottom step that will allow the planner through a mission statement, describing the progress of the strategic planning process, the services, the responsibilities of both parties and the method of compensation and the amount. This is essential, since it allows the customer-planner relationship on the right foot and also allows the customer to understand in what he agrees and gives him the time to enlighten his questions with the planner.
It is important to note that this step will also allow the scheduler to protect against possible civil suits.
Step 2 – Information and Client Objectives
The second stage of investment planning process is the gathering of customer financial information and understanding of their personal and financial goals. These objectives will influence investment decisions and should always be taken into account in decisions made during the strategic planning process . Risk tolerance is another element that will be defined using the information provided.
It is interesting to try to quantify as objective as possible (as the amount needed for retirement, for example). Once all the objectives established, the financial planner should discuss with the client to put them in order of priority.
Step 3 – Weaknesses and Opportunities
The third major step of strategic planning process is or financial planner will assess the extent of the resources and the current financial situation of the client. This information will allow the planner to determine whether the client currently has the resources to meet its objectives.
It will also highlight all current and future opportunities and current and future constraints that may impact positively or negatively on the customer’s ability to fulfill its plans and achieve its objectives.
Step 4 – The Strategic Investment Plan (Development)
The Fourth Stage of the strategic planning process is the investment or financial planner will develop the strategic investment plan, and present it to the client. Obviously, the assumptions that must be plausible, should be used for planning future goals. As you probably understand, the scheduler will use the data and information gathered in the previous steps to develop the strategic planning of investments.
Step 5- Implementation of the Strategic Plan Investments
At this stage, we will implement the investment plan developed in the previous step. The financial planner will make clear to his client that it will, to achieve its goals, follow the developed strategic plan. Sometimes, the client will choose to make only a part of the strategic plan with the financial planner and leave the task to other institutions or other advisors realize other parts of planning. Although the role of financial planners in this step is reduced, it is nevertheless important that it is present.
Step 6 – Feedback, Monitoring and Updates
The last step of the strategic planning process, which contains feedback (feedback), follow up with the client and updates the plan is probably the most important and most basic level of long-term development of a trusting relationship between client and financial planner.
At this stage, the planner should be informed about the development of the client’s investments, will calculate the actual return on realized investments, should contact the customer if there are interesting opportunities or unexpected situations, etc.
It is important for the financial planner to define the level of monitoring and the quality of it in its engagement letter so as to give a good idea to customer care actually receive it.
