Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

The first step in the financial planning process is understanding the client's personal and financial circumstances. This foundational phase is crucial as it involves gathering comprehensive information about the client's financial situation, including their income, expenses, assets, liabilities, and overall financial health. Additionally, understanding personal factors such as the client's values, priorities, and life goals is essential.

This step sets the stage for all subsequent financial planning activities. By thoroughly understanding the client's situation, the planner can ensure that the advice and recommendations provided are not only relevant but also tailored to meet the client's specific needs and objectives. It creates a strong basis for identifying and selecting goals, which is the next step in the process. Without a solid understanding of the client's circumstances, any developed recommendations may lack effectiveness and may not align with the client's true aspirations.