Identifying the Correct Step of the FP Process

During an initial meeting with a new client, financial planner Denise explains her firm's services and discloses how she will be compensated. She also clarifies her responsibilities and asks the client about their expectations.

Which step of the CFP Board’s 7-Step Financial Planning Process is Denise performing?

1. Identifying and selecting goals
2. Developing the financial planning recommendations
3. Understanding the client’s personal and financial circumstances
4. Understanding the client’s situation and agreeing on the scope of engagement