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The six steps of financial planning

What to expect when you consult a financial advisor.

If you have never consulted a financial advisor, it is difficult to know what to expect.

The Financial Planning Standards Board (FPSB) has developed a six-step process that is widely used by financial advisors and brokers when meeting with clients. The FPSB develops education programmes for financial planners and is also the owner of the Certified Financial Planner (CFP®) programme.

Wouter Fourie, CFP® and director at Ascor Independent Wealth Managers, says the six-step process provides continuity. In the unfortunate event that something happens to the advisor, another financial planner can step in without major disruption. 

Below the six-step process is set out in brief. 

1. Establish and define the relationship with the client

During the first consultation the client will generally be provided with information about the company, its competencies and the financial planning process, Fourie says.

The financial planner will also determine whether the firm is in a position to meet the client’s needs. Where it is clear that a client will not be willing to engage within the advisor’s ethical framework or has unrealistic return expectations, the advisor may terminate the relationship early on.

Fourie says the scope of the engagement will also be defined. A client mandate sets out exactly what the client expects.

At this stage, the client will also indicate whether a single or product analysis or a comprehensive financial planning exercise is required.

2. Collect the client’s information

During the second step of the process, the advisor will collect the client information.

This will include identifying the client’s personal and financial objectives, needs and priorities and collecting quantitative (assets, liabilities and documentation) and qualitative information.

Fourie says during the collection of qualitative information the advisor will ask “softer” questions around life planning and probe the client’s experience with money, how it affects his or her choices, whether the client has a budget and how he or she perceives risk and financial independence.

These types of discussions allow the advisor to get a better sense of a client’s priorities, he adds.

3. Analyse and assess the client’s financial status

This usually happens after a first and possibly even second consultation, Fourie says.

In analysing and assessing the client’s financial status, the advisor will analyse the information that was previously collected. The client’s objectives, needs and priorities will be assessed and the advisor will provide a written quotation for the services offered.

Once the quotation is approved, the parties will proceed to the next step.

4. Develop the financial planning recommendations and present them to the client

During this phase, financial planning strategies will be identified and evaluated. Financial planning recommendations will also be developed and presented to the client in writing, Fourie says.

5. Implement the financial planning recommendations

Fourie says during step five the client will be provided with a written plan of action and the parties will agree on the implementation and responsibilities.

The advisor will get the client’s consent to proceed with the implementation and assist the client with the necessary paperwork, lodge applications to relevant product providers and keep the client updated with the progress of the application.

Clients may decide to implement the plan themselves, or contract the advisor to implement. In the latter case, the advisor will keep the client up to date about the progress.

6. Review the client’s situation

Fourie says the advisor and client will agree on the responsibilities and the terms of review of the financial situation.

A review should be done at least annually.

Situations that warrant a review include a change in marital status, new child, loss or change in job, inheritance, death, change in responsibilities, change in goals or financial objectives and health changes, he says.



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Dear Inge

What I miss from this “What to expect” article is – what to expect to pay.

From your experience, what is the average/going RATE PER HOUR for financial analysis as explained above.

Also, what is the best practice arrangement between you and your adviser when he/she earns commission based fees on archaic products that just will not accept that you and your adviser have an hourly arrangement but insists on paying a commission (like PPS and their insurance products)


I will try and answer your question addressed to Inge.
1) Rate per hour. The rate per hour depends on the qualification and experience of the financial planner. You can expect to pay a lower fee for a junior, less qualified and experienced, planner compared to a more senior planner. The fee range is anything from R500 to R4000 per hour. Similar to when you consult a junior attorney and a senior attorney. We, as professional planners, prefer charging a fixed plan fee i.e. R10,000 for a normal plan and higher fee for a more complex plan. Similar to when you ask an auditor for an audit. You get normal audits and their price is different from a more complex audit. Charging a plan fee is fair towards the client for you know exactly what your costs will be and you don’t have to worry about how the advisor earns his/her income and find yourself taking out another policy you actually don’t need or cannot afford.
2) Commission earned on selling a policy is not paying for advice. The Commission is paid by insurance companies for the implementation and servicing of the product for its full life span and even five years after the product matures. Too many advisors think that commission paid by insurance companies are for advice – this is totally wrong and only leads to a conflict of interest. Advice must never be dependent on selling a product to earn a commission to pay for the advice. If you earn a commission as an advisor you need to take responsibilty to channel those fees to set up the necessary infrastructure, comply with legislation to service your client and the product for its full lifespan.

Thanks for this, Wouter!

Not much to add to Wouters response except that if the underlying solutions do pay a commission then the advisor needs to discount this from his fee.

Engaging with fee based clients and they may require life cover for estate planning, the life company pays a commission (they are moving to an as-and-when fee), we discount this commission against the plan fee – this assists with the transparency.

So ask your planner to disclose the commission and discount this from his fee. Or, better yet, tell him to chose a ZERO commission fee (this is an option) and invoice you fully – the zero commission will mean lower premiums for you.

Well written but to picture needs to be complete . Tax ..a major issue when one goes on retirement. The planners paint this glorious picture and conveniently forget to include capital gains taxes which have huge impact on cashflow.


Capital Gains Tax is only one of the 26 legislations a professional planner addresses when assisting a client in presenting a comprehensive financial plan. Unfortunately, not everybody calling themselves financial advisors are equally qualified or experienced and you, therefore, have to do your homework before choosing a Financial Advisor/Planner. A good starting point is the Financial Planning Institute of SA where you can search for a CERTIFIED FINANCIAL PLANNER (CFP). have a look at this short video

Thanks Wouter . Kind of you.

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