5 Steps of a Comprehensive Financial Plan

5 Steps of a Comprehensive Financial Plan

24 Jun 2021

If you are looking for a financial advisor in Canton, OH to assist you with your retirement planning, you may have come across the term: comprehensive financial planning. In this article, we will discuss what a comprehensive financial plan is, as well as the 5 steps involved in creating one.

A truly comprehensive financial plan is tailored uniquely to your specific financial picture and long-term goals.  Think of financial planning as an opportunity to receive helpful assistance from a fee-only fiduciary who reviews your current financial standing and creates a plan for you to reach your nuanced financial aims in the years and decades ahead.

Perhaps you would like to retire by 60.  Maybe you would like to send two kids to college without burdening them with student loan debt.  Perhaps you are primarily focused on building a business, diversifying your investments to mitigate risk, and/or expanding your nest egg for comfortable golden years.

Your financial advisor will analyze your specific financial situation and lay the groundwork for successful financial management in the months, years and decades ahead with an emphasis on strategy rather than relying on guesswork and emotions that soar and sink similar to a roller coaster.  There can be a stark contrast between professional financial planning and DIY financial decisions that many times are rooted in emotion rather than facts and wisdom.

Let’s take a look at the components of a truly comprehensive financial plan carefully crafted by a CERTIFIED FINANCIAL PLANNER™ Professional.

The First Step:  Defining Financial Goals

Your unique financial goals are probably not the same as your neighbor’s or your co-workers. Your specific aims will ultimately shape your financial plan, serving as a roadmap of sorts for your personal finances across posterity.  Your goals and objectives should be crystal clear and have a specific timeframe for completion.  Furthermore, there must be a distinction between your desires and your needs.


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A financial advisor will help you pinpoint realistic goals, document those goals, and gradually progress toward them.  Furthermore, these goals should be reviewed at specific increments for alteration based on your unique life circumstances, ultimately ensuring the pathway to achieve your goals is still accurate as time progresses.

The Second Step: Organizing Personal and Financial Information

The process necessary for financial planning and the success of that planning hinges on the clarity as well as the quality of the information provided to the financial advisor.  The advisor performs a comprehensive financial finding of facts to obtain the information required to understand the entirety of your unique financial picture.

This fact-finding includes an analysis of assets, liabilities, expenses, income, and more.  Even your unique tolerance for risk will be considered when developing a plan based on an understanding of your financial picture and goals.

The Third Step: Analyzing Your Finances

The financial advisor will review all of the information pertaining to your personal finances as detailed above.  This information is necessary to generate a report that reflects your existing financial situation.  Several important ratios are generated to enhance the understanding of your specific financial picture and also to identify areas that are particularly strong and weak.  Such ratios include but are not limited to your liquidity ratio, savings ratio, solvency ratio and debt service ratio.

Your tolerance for risk, capacity for risk and your personal feelings pertaining to finances and investing will be evaluated by your financial advisor.

The Fourth Step: Developing and Presenting the Financial Plan

Your financial plan is created based on the data listed above in step two and the analysis detailed in step three.  The objectives and aims listed in the first step must be addressed.  Your financial advisor will provide recommendations for each of these objectives and goals.

The ensuing financial plan will include a net worth statement, also known as a balance sheet, an annual consolidated tax calculation, and an annual cash flow report showing a surplus or deficit.  The financial report is subsequently presented, and examined by you.

The Fifth Step: Implementing and Reviewing the Financial Plan

Now that the financial plan is created through in-depth analysis, the advisor will outline the suggested course of action.  This process has the potential to require implementing a new investment/pension strategy, changing debt providers, adjusting income and expenditures, estate planning, tax planning, and may also include adding life or illness insurance.

The advisor might also play the role of a financial quarterback and assist with the coordination of the recommendations detailed during meetings.  The ensuing process is coordinated with you, the client, as well as other relevant professionals ranging from investment managers to accountants, tax advisors, attorneys, etc.  The financial advisor might also handle all interactions with those who provide financial products.

Financial Planning is Challenging, Complex and Requires Patience

It will take some time and effort to develop a truly comprehensive financial plan.  The process required for comprehensive financial planning is dynamic, meaning it has the potential to change as time progresses rather than remaining stagnant.  Ongoing monitoring is necessary for comprehensive financial planning that makes a meaningful difference.

Ideally, the recommendations within your plan will be reviewed with regularity.  The goals of your financial plan should be reviewed at least once per year to account for income alterations, changes in asset values, and significant life events such as a marriage, divorce, job promotion, and/or the birth of a child.

Financial Planning is not a DIY Endeavor

The moral of this story is you need and deserve the guidance and insight provided by a professional fee-only fiduciary who specializes in financial planning.  Meet with a CERTIFIED FINANCIAL PLANNER™ Professional to go over your idiosyncratic financial situation and the wheels will be in motion for the creation of a well-defined and properly documented process that may enhance your chances of reaching your specific financial goals by your target date.

This is the holistic, educated and informed approach to financial planning needed to make the most of your hard-earned money.  Though the assistance of a CERTIFIED FINANCIAL PLANNER™ Professional will not guarantee financial security across posterity, it will certainly set the stage for ongoing financial success as you make steady progress toward your target retirement date.

By working with a fiduciary like McGervey Wealth Management, you can be assured you’re getting investment advice from a firm that has the obligation to disclose conflicts of interest and put your interests ahead of its own. We get to know you on a personal level and keep things simple, using common language everyone can understand. To learn more about McGervey Wealth, contact us today or get your wealth score to see how you stack up for retirement.

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More About the Author: E. Michael McGervey, CFP®, CRPC®

Mike is passionate and skilled at helping clients solve complex financial challenges. He’s known for his thoughtful communication, educational approach, and exceptional customized service. Mike has been a sought-after source for financial television, magazines, and newspapers looking for insightful analysis. His expertise has been featured by CNBC, FOX Business and...