What Is the CFP Board's 7-Step Financial Planning Process?

The CFP Board oversees the Certified Financial Planner™ designation and provides planners with a guideline to a seven-step process for providing financial advisory services. The process takes the financial advisor and client through the entire relationship, beginning with the initial meetings and progressing through years or decades of monitoring and adjusting the plan as the client’s circumstances change. The CFP® financial planning process is designed to progress in an organized manner, with each step supporting the one that follows. By the end, the goal is for the client to have a comprehensive and financially sound plan.

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The 7-Step CFP® Financial Planning Process

A man approaching retirement, searching for CFP® financial planning services.

There are several different approaches to providing financial planning services. Some financial planners provide standardized services, while others might segment clients into tiers and customize the process according to characteristics such as assets under management or high-net-worth clients.

The CFP® financial planning process is intended to provide a template for solo practitioners to use while working with the typical client. The seven steps include:

1. Understand the Client’s Personal and Financial Situation

The advisor should ask the client questions to gather a broad spectrum of relevant qualitative and quantitative information. This may involve collecting information about the client’s personal circumstances, such as age, health status, family situation and life expectancy, along with financial details like income, spending habits, cash flow, assets, debts, savings, insurance coverage and tolerance for risk.

2. Identify and Set Goals

Building on the initial discussion, the advisor and client review the goals that were identified earlier and refine or reprioritize them as needed. A client might focus on eliminating student debt, buying a second home or saving for a child’s education. The advisor may also recommend adding goals such as increasing insurance coverage, strengthening savings or establishing an estate plan.

3. Analyze the Current Course of Action and Alternatives

This step focuses on measuring progress toward stated goals and evaluating whether current financial behaviors are effective. Based on that analysis, the advisor can recommend changes, such as saving for education, restructuring debt or adjusting the portfolio’s asset allocation, to improve results.

4. Develop a Financial Plan

Next, the advisor works with the client to review and confirm the information gathered earlier. Using financial models and planning assumptions, such as projected life expectancy, the advisor develops recommendations designed to support the client’s goals. These may build on prior findings and can include adjustments to insurance coverage, estate plans, asset allocation, borrowing strategies and education funding.

5. Present the Financial Plan

Clients are provided with a hard copy of their financial plan and can view supporting information through a secure digital platform. The advisor reviews the plan in person and answers questions about the assumptions and calculations behind the recommendations.

6. Implement the Plan

Some engagements end once the advisor has created and presented the financial plan. When that is the case, implementation falls outside the scope of services. If implementation is included, the advisor outlines next steps in a written action plan with target dates. Both parties may have assigned responsibilities, such as the client adjusting retirement plan investments and the advisor coordinating referrals to insurance, legal or other professionals.

7. Monitor Progress and Update

Over time, the advisor evaluates investment results, portfolio composition, insurance coverage and related areas, recommending adjustments as needed to keep the plan aligned with the client’s goals. The advisor also gathers updated information about changes in employment, priorities or life events that could affect the plan.

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Planning Process Perspectives

The CFP® financial planning process is just one way a financial planner could serve a client while complying with the Code of Ethics and Standards of Conduct to which a CFP® practitioner must adhere. According to their professional judgment, a CFP® professional might choose to follow a different process.

For example, a CFP® might begin with a somewhat different first step that includes a discussion of the type of financial planning services the client will receive. This could include providing the client with the planner’s training, credentials and history, as well as information on the variety of services available and pricing.

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Frequently Asked Questions (FAQ)

Is the CFP® financial planning process required for all financial advisors?

No. The seven-step financial planning process is a framework established by the CFP Board for CFP® professionals. Financial advisors who do not hold the CFP® certification are not required to follow this specific process, though many use similar approaches. CFP® practitioners, however, are expected to provide financial planning services in a manner consistent with CFP Board’s standards.

How long does it take to complete the CFP® financial planning process?

The timeline varies by client. Some elements, such as data gathering and goal setting, may occur over a few meetings, while implementation and monitoring continue on an ongoing basis. For many clients, the process evolves over years as goals, income, family situations and market conditions change.

How often should a financial plan be updated?

There is no universal schedule, but many CFP® professionals recommend reviewing a financial plan at least annually. Updates are also appropriate after major life events, such as marriage, divorce, a job change, inheritance or the birth of a child.

Bottom Line

The CFP® financial planning process is just one way a financial planner could serve a client while complying with the code of ethics and standards of conduct to which a CFP® must adhere.

Beginning with gathering information about a client’s financial situation and plans, the CFP® financial planning process takes the planner and client through a logically arranged sequence of steps that concludes with overseeing and adjusting the plan to reflect future changes. While this process is not guaranteed to produce a perfect plan and is only one possible way a competent and responsible CFP® might work with a client, anyone pursuing the CFP® designation will become familiar with it during the process of completing the required studies.

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