Step 2 of the Financial Planning Process

During an initial client meeting, a CFP® professional gathers details about the client’s current financial situation, including income, assets, liabilities, and expenses. The client also shares that she hopes to retire early, purchase a vacation home, and fund her grandchildren’s college education.

Which of the following actions best represents Step 2 of the financial planning process?

1. Determining the client’s risk tolerance and time horizon for each investment goal.
2. Assisting the client in prioritizing retirement, vacation home purchase, and college funding as specific goals.
3. Analyzing whether the client’s current income and savings are sufficient to meet future obligations.
4. Developing a comprehensive retirement projection to estimate required accumulation at retirement age.